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Millennials getting a foot in the market

Greta Andrews-TaylorThe West Australian
The market is abuzz with millennials as post-COVID-19 has delivered more achievable low interest rates, a more affordable market and government stimulus.
Camera IconThe market is abuzz with millennials as post-COVID-19 has delivered more achievable low interest rates, a more affordable market and government stimulus. Credit: Getty Images/iStockphoto.

One in three millennials are planning on buying a property within the next two years, according to research commissioned by ING.

The role which personal property plays in people’s lives appears to have been impacted by the COVID-19 pandemic, with the research showing that ownership is important to more than half of the nation’s adult population.

Key factors brought to light in ING’s Future Focus: Homeownership Report regarding why buying a home in the post-COVID-19 market will be more achievable are low interest rates, a more affordable housing market and new government schemes.

The pandemic has also put people in the position to build on savings, with more than half of the nation saying it had forced them to take more control.

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Speaking to West Real Estate, Space Real Estate Licensed Real Estate Agent Aaron Potter said new properties in the right price range were inundated at home opens, with the number of first homebuyers, especially millennials, increasing.

“This is backed up in the latest lending data showing first homebuyers are the demographic which have surged in Western Australia, making up 39.8 per cent of all lending and at its highest since December 2011,” he said.

“There is a combination of government grants available to first homebuyers, record low interest rates and prices of dwellings further reducing. Then there is the low rental vacancies and increasing rents in WA, which is the direct result of lack of rental stock.

“This has encouraged first homeowners to enter the market.”

Mr Potter said it certainly felt that there had been an increase in the number of people looking to purchase a property recently, however it could be due to low stock levels.

“Buyer enquiry has continued to be strong, however stock levels of dwellings has again fallen – down 28.7 per cent from the equivalent time last year. Perth is now leading the country in this reduction of stock levels,” he said.

“Agents have long been saying population growth is needed to stimulate price growth in WA, with supply levels being greater than buyer demand after the mining boom ended and population stabilised.

“This has now flipped because of the retraction of available homes on the market to buy.”

Ray White Whiteman & Associates Director David Whiteman said he thought the pandemic had shown people thought more about security and stability, so it encouraged them to sure up their future.

“The huge percentage of millennials, or people in that study who were suffering from rental fatigue or were concerned about stability and security, made up 67 per cent of the survey – that’s a big peak,” he said.

“In some cases, it’s cheaper to buy your own house.”

Mr Whiteman said a large amount of properties were withdrawn from the market during coronavirus, which changed the balance of the market and how it moved.

“Because there was such a reduction of properties for sale, the buyers who were left in the market had this immediate sense of ‘something’s changed, things are selling more quickly, I don’t have as much choice as I used to have’, so it shifted the balance in the market back towards the sellers,” he said.

“Before coronavirus, I think we had about 14,000 homes for sale in the metropolitan area and buyers had time. There were less buyers than there were properties for sale. They had this time, and they took the time.

“With the change of coronavirus, buyers thought ‘I better make a decision because I don’t have the choice’, and they were starting to see properties going under offer.

“It encouraged people to make decisions.”

Mr Whiteman said in terms of which particular demographics had been most interested in purchasing a property lately, it would be millennials and even Generation Z.

“I think largely in the market, and talking to my colleagues around the industry, most markets are focused on investment, first homebuyer, second homebuyer and people who are seeing an opportunity to move,” he said.

“In terms of why we think it’s a good time to buy – you’ve got record low interest rates. I think it’s probably going to be three or so years before we start seeing an increase in interest rates, so you want to take advantage of that.

“Particularly, Perth people are saying prices are really low, money’s easy to get if you’ve got a stable job, there’s an appetite for banks to lend money and interest rates are really cheap, so why not take advantage of it?

“I think that’s really what’s at play in most people’s minds, and I think certainly the stimulus has brought some of those people forward.”

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