The head of Mortgage Choice is concerned about the number of first-home buyers being priced out of the housing market, saying it could create social problems in the long run.
Michael Russell says social problems could arise if first-home buyers continue to be locked out of the housing market as they have been since low interest rates began enticing hordes of investors to property.
“We’re concerned… and there’s no easy answer for them because, particularly in those states where they’re very auction-heavy, they are being outbid,” Mr Russell told reporters on Tuesday.
“What we know is that when young people buy their first home, they become much more valuable contributors to society and in the communities in which they live, they garnish a real sense of home ownership and pride and they contribute a lot more to the social fabric of our nation.”
Official figures show first-home buyer numbers are at an all-time low, although the Australian Bureau of Statistics is currently investigating whether they have been under-reporting first-home buyer numbers, amid concerns that some lenders were only reporting those buyers that received a first-home buyer grant.
Mr Russell said the figures could also be distorted by the fact that first-home buyers were choosing to buy investment properties.
“A lot of first-home buyers are far more discerning now than when I first bought my home, they’re smart these young kids,” Mr Russell said.
“A lot of them are electing to buy investment properties now – some will elect to rent and own an investment, some will just stay at home longer.”
Mr Russell said first-home buyer grants were necessary but should be indexed to the movement in median house prices.
He said it was a myth that grants drove property prices higher.
“Don’t subscribe to the notion that first-home buyer grants provide an inflationary effect on property – it doesn’t,” he said.