terry ryder in the australian

http://www.theaustralian.com.au/business/property/overrated-first-timers-should-look-to-fringes/story-e6frg9gx-1226034773448

Overrated first-timers should look to fringes HOTSPOTTING: Terry Ryder From: The Australian April 07, 2011 12:00AM Increase Text SizeDecrease Text SizePrintEmail Share
Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these?FRANKSTON North is a leading property growth area of Melbourne. The three bayside Frankston suburbs had more than 1200 house sales last year and the long-term capital growth rate is 13 per cent a year. The typical house there sells for $280,000.
In Blacktown, one of the most promising growth areas in Sydney's west, 370 units were sold last year at a median price of $280,000 and 620 houses at a median $350,000. At Westmead near Parramatta, the most popular place in NSW for first-home buyers last year, 315 people bought units at an average $355,000.

At Whyalla, the largest regional centre in South Australia, you pay $230,000 to $270,000 for a typical house and about $150,000 for the average unit, despite capital growth rates averaging 13-14 per cent over the past 10 years.

In Ipswich, the No 1 hotspot in the Brisbane area, most suburbs still have median house prices in the $200,000 range. A little further west, in Queensland's largest inland city, Toowoomba - set to grow on the back of Surat Basin mining - a typical house costs $290,000 and a unit $220,000.

Start of sidebar. Skip to end of sidebar.
Related CoverageProperty boycott push gains ground Adelaide Now, 31 Mar 2011
Studios given a bad rap The Daily Telegraph, 18 Mar 2011
Value found in Adelaide's north Adelaide Now, 18 Feb 2011
First-home revival under way Adelaide Now, 18 Feb 2011
Buying first homes on the double Adelaide Now, 16 Feb 2011
.End of sidebar. Return to start of sidebar.
Up in the northern suburbs of Adelaide, the eight Elizabeth suburbs have median house prices ranging from $190,000 to $230,000, despite long-term growth rates in the 12-14 per cent band. Unit medians range from $140,000 to $175,000.

I'm telling you all this because of the increasingly hysterical rhetoric about affordability in Australia. We now have a website devoted to organising a market boycott by first-home buyers until prices jolly well behave themselves. The proponents of the website claim no one can afford to buy any more. Clearly, they haven't wasted too much time looking around.

They're headed for disappointment if they think their wacky scheme will have an impact.

Can you imagine a young couple who have saved a deposit and are ready to buy deciding to turn their back on their dream to join this pointless publicity stunt?

Even harder to imagine is vendors supporting the campaign by knocking 30 per cent off their asking prices to mollify activists who don't like market levels.

With the implementation of this dummy-spit campaign, and the undue level of publicity it has attracted, the debate on affordability has drifted beyond emotion-charged into the area of lunatic fringe.

It confirms my long-held belief that Australia overrates the importance of first-home buyers in the overall scheme of things. In particular, first-home buyers overrate themselves.

We've turned renters who want to become buyers into a protected species, a section of society that dominates political thinking and obsesses our media.

Anyone who buys a home for the first time gets a handout from the federal government. They also get grants from state governments. Further, they'll get stamp-duty concessions.

If they're building a new home, they'll get more. If they're building it outside the capital city, they'll get an extra donation.

Why do we give this kind of reverence to first-time buyers? As a market segment, they're quite insignificant, accounting for one in six property sales.

If all the prospective first-home buyers in Australia were silly enough to join the boycott, the market would be largely oblivious. The most important buyers are other home buyers, who comprise the bulk of the market, followed by investor buyers.

It's worth remembering that first-home buyer activity peaked back in April-May 2009 - long before the first-home owners grant boost was phased out at the end of that year. Commentators predicted prices would fall - but they rose, a situation that continued well into last year. This happened because first-home buyers were not the market force those commentators supposed.

All this generosity to first-home buyers is relatively recent. We've managed to get to a situation where 70 per cent of households own their homes - still one of the highest home ownership rates on the planet - without propping up those buying for the first time, until recently.

Certainly, none of this largesse existed when I bought my first property. It was also much harder to get a loan. None of the junior lenders that now proliferate existed then. I did what everyone else did - made sacrifices, saved hard and bought a modest home in a downmarket area to get my foot on the bottom rung of the ladder.

I think the core of the issue is the unreal expectations of the young Australians. Some expect to buy their dream residence in a leafy cafe-culture suburb close to the city as a first purchase.

Many would sneer at the suggestion of buying in Ipswich or Frankston, because they're downmarket and a long way from the lifestyle precincts.

But it's these kinds of places that lead the market in capital growth rates and they have more to offer than many imagine.

Buying property for the first time is about starting on a path of building wealth, and first-time buyers need to look in the cheaper areas to make it happen. Affordable property exists, if people are prepared to go out and look.

Terry Ryder is the founder of hotspotting.com.au

[email protected]

twitter.com/hotspotting