More renters buying homes
but investors remain subdued
The share of owner occupiers purchasing in the land market reached a new high in September quarter 2020 – surpassing the previous quarter’s record high. Owner occupiers represented 90% of the market, up from 85% in June quarter and 77% in March quarter, and well above the same quarter last year (64%). This result dwarfs the long running average of 65%, and highlights two clear factors; the absence of investors, and the consequent proliferation of first and subsequent home buyers. With the introduction of the HomeBuilder scheme, this trend is expected to continue through the remainder of 2020.
First home buyer representation continued to increase, reaching 77% this quarter (up 7% from the same time last year), and it is anticipated that December quarter will also be overly represented by these buyers.
While there is uncertainty in the economy, we anticipate an increasing presence of subsequent home buyers, as the established market hasn’t fallen as much as originally forecast. Therefore, owners may feel more confident to sell. In addition, the HomeBuilder initiative (although set to expire in December), historically low interest rates, the easing of responsible lending legislation allowing for higher levels of borrowing, and defined timeframes around titles and building, are all attractive factors for buyers to enter the land market.
The HomeBuilder grant has provided the necessary impetus for renters to move into home ownership, with this buyer group making up 52% of all buyers, up 8% from last year. Similarly, the incentive has provided a boost to buyers who were previously living with parents, with these buyers making up a quarter of purchasers in September quarter 2020 – up from 20% in the same quarter in 2019.
Furthermore, many other positive variables in play continued to encourage couples and singles to enter the land market. In September quarter, singles made up 29% of all households which was 8% higher than last year. Further still, couple households made up 37%, up marginally from 36% in the same quarter a year ago. We anticipate these two buyer groups to continue to edge higher in December quarter before the expiration of the HomeBuilder grant.
An increasing presence of land purchasers (including house and land packages) over townhomes was evident this quarter (85%) when compared to September 2019 (80%). This can be predominantly attributed to the HomeBuilder initiative applying to titled or near-titled lots following its introduction at the start of June. This initiative has triggered a large increase in the demand for house and land packages, representing 33% of property types sold this quarter, 8% higher than September quarter 2019.
This is further supported by 97% of purchasers indicating that they wished to begin construction within six months of their lot titling, up from 89% last year. The higher representation of house and land packages reflected budget consciousness in buyers, given they are generally smaller lots and therefore a lower cost product. This is evidenced by 32% of buyers indicating an anticipated outlay of below $450,000, up from 26% a year prior, and a slight drop in buyers intending to spend over $600,000.