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Sydney a 'no-go zone' for first home buyers by 2019

Sydney a 'no-go zone' for first home buyers by 2019

31 August 2015 Jennifer Duke

Sydney will be a "no-go zone" for first home buyers within just four years as the number of Gen Ys getting on the ladder plummets faster than ever before, according to new forecasts.

By 2019 research house BIS Shrapnel predicts that just 23.7 per cent of Sydneysiders aged 20 to 34 will own their home, compared to 43.2 per cent in 2011.

NSW is the hardest hit by affordability problems so will see the biggest drop in the country, says BIS Shrapnel senior manager Angie Zigomanis.

"Part of this may be by choice – 20 to 34 year olds may prefer to keep their options open and rent for now – and part may be by necessity or affordability," Mr Zigomanis said.

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The forecasts consider population growth, loans to investors and first home buyers and the past five census data.

Professor Bill Randolph, director of UNSW City Futures Research Centre, said the future looked grim for first home buyers.

"The investor-fuelled housing boom is driving the young into Generation Rent," Dr Randolph said.

"Sydney will end up being a no-go zone for younger home buyers in a few years if this continues." 

Dr Randolph warned that a shift in perspective about the meaning of "home ownership" is adding fuel to the unaffordability fire.

"It's now seen as a financial asset to be bought and sold on the market rather than your home," he said.

BIS Shrapnel managing director Robert Mellor pointed to a lack of supply, stamp duty costs and the redirection of first home buyer grants to new builds as issues that have caused a "worrying" first home buyer crisis.

"It was a perfect storm before and investors have added to this," he said.

"There are no signs of first home buyers getting into the market at the moment and I can't see this trend being reversed."

Domain Group senior economist Dr Andrew Wilson said changes in grants and incentives from state governments since 2011 have altered the first home buying dynamic.

"Home ownership is seeing people wait longer in the queue, but the aspiration for home ownership is still very strong," Dr Wilson said.

Bis Shrapnel expects declines in other states as well.

 In Queensland and Victoria, first home buyer numbers are likely to fall to 26.1 per cent and 33 per cent.

In Western Australia first home buyer aspiration is set to remain strong and achievable - with home ownership rates of 45.2 per cent of Gen Y predicted for 2019.

 

Source: domain.com.au

13 July 2015