Tough times ahead for first home buyers

By EMMA BISCOE
Housing affordability has been deteriorating in all capital cities and regional areas, and Canberra has one of the largest falls.

Ben Phillips, an economist from the Housing Industry Association (HIA), said that there are a range of reasons for prices in Canberra rising so rapidly.

“You have strong income growth and population growth in Canberra,” he said. “There is a general level of positivity towards housing at the moment that wasn’t there 12 months ago, so that’s why we are starting to see some strong gains in terms of house pricing .,”

With higher interest rates and the end of the boost to the first home buyers grant, 2010 looks to be a tough year for first home buyers “We’ve seen large increases in house prices in Canberra, so things are pretty difficult for the first home buyers,” he said.

According to the Commonwealth Bank and the HIA Affordability Index, the average repayment for first home buyers in Canberra is $2800 per month which is “about 30% of their disposable income.”

Canberra resident and prospective first home buyer Stuart Biggs is considering buying in Goulburn because the prices in Canberra are too high.

“The house repayments for buying in Canberra are more expensive than buying the same house in Goulburn and commuting every day; cost of petrol and lost work hours included,” he said.

Mr Phillips says that there is a general lack of housing supply across the country, which in turn tends to inflate the cost of housing.

According to the Australian Bureau of Statistics, from December 2008 to December 2009 house prices rose in Canberra by 12.4 %, just .4 of a per cent behind Sydney.

Mr Phillips says Canberra house prices are extremely close to overtaking Sydney’s, but Sydney is in a worse situation than that of Canberra.

Mr Phillips says that the ACT Government needs to be releasing approximately 2000 lots of land per year to prevent Canberra house prices overtaking Sydney’s.