MANY renters are buying their first home rather than fork out for exorbitant rent, new research shows. First home buyers are dipping their toe back into the market while prices and interest rates are low.
New research has revealed they are more confident about buying a house now than they were six months ago.
Rising rents is one of the key factors that has first-time buyers considering if it is time to take the plunge.
Latest CBA/Mortgage & Finance Association of Australian research has found that current high rents mean two-thirds of first-time home buyers were re-evaluating the trade-off between renting and buying.
It found about 17.2 per cent of first-home buyers were planning to enter the housing market sometime in the next 12 months.
But almost 70 per cent say they are still holding back due to the fear of servicing higher debt mixed with a fear of future job redundancies.
About two-thirds of first-home buyers believe rentals are too expensive, and about 40 per cent feel they are caught in a rental trap, according to Commonwealth Bank executive general manager of third party banking, Kathy Cummings.
She says in many cases it is cheaper to buy than rent and first-home buyers appear to be working productively towards raising the required deposit to get into property.
Emma Raphael of Place at Camp Hill in Brisbane says that is what many of her recent clients have been telling her.
She has worked in real estate for almost 12 years and says lately she has seen an increase in potential buyers in the Generation Y group.
"But while I think they are being a little bit cautious, I think confidence is definitely being restored," she says.
She believes many have come out looking following interest rate drops and predictions of more.
She says rising rents is also something many are telling her is encouraging them to investigate the market.
"The mind set has shifted - they are prepared to forgo going out to dinner once a week, they reckon it is a pretty good sacrifice to make," Ms Raphael says.
Lachlan Walker of Place Advisory says potential Gen-Y buyers seem to be researching the market. "That is starting to happen now, we've got a lot of people coming out to open homes, a younger demographic attending open homes and offices. Those committing is still fairly minimal," he says.
Mr Walker says rising rents and dropping vacancy rates are leading to more considering entering the property market for the first time.
"That is definitely driving the propensity to buy I suppose, because when you are spending $550 to $600 a week on your rent it becomes more feasible to purchase that property for $450,000," he says.
"Yes, you have to sacrifice because (when renting) we want everything at our fingertips, want to be close to town, infrastructure and amenity. That has got to be sacrificed - you have to go a bit further out."
According to RP Data research analyst Cameron Kusher weaker market conditions across most capital cities means there are opportunities to find bargains.
