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As expected first home buyers have set a record last year for the largest ever increase of purchasing homes. With the government boosted grant it has been no surprise that many first home buyers took the opportunity to get on the property ladder. However as with everything there is no doubt with that 2010 will see the biggest drop in home buyers since records began.

FIRST-HOME buyers leapt to the highest level on record during last year, with 191,000 Australians taking their first step on the property ladder.
Last year saw almost 70,000 more first-home buyers pile into the market than in 2008, a 55 per cent leap, according to property research firm RP Data.

The jump is directly linked to the government doubling the first-home buyers grant to $14,000 for existing dwellings and increasing the handout to $21,000 for new dwellings. The grant boost was phased back in December, The Australian reported.

The government’s boosted grant was announced in October 2008, providing a stimulus during the global financial crisis.

But adding to the equation was interest rates at 49-year lows.

Cameron Kusher of RP Data said the month that recorded the highest owner-occupier finance commitments was May, when 28.8 per cent of the commitments were from first-home buyers.

“During 2009, owner-occupiers took out finance for approximately 739,000 dwellings, of which 26 per cent was taken out by first-home buyers and the remaining 74 per cent came from non-first-home buyers,” Mr Kusher said.

“It’s no real surprise that first-home buyers were so active during 2009, given that the government was
offering the First Home Owners Grant Boost.”

Western Australia was the most popular state for first-home buyers last year. State government incentives of low or no stamp duty also boosted the market, as did a softening in property values during 2008.

Mr Kusher said that between 1992 and 2009 there was an average of just over 116,000 first-home buyers annually.

“Not only was the level of activity during 2009 the highest on record, it was 64 per cent greater than the long-term average level of activity,” he said.

During December last year, after the first-home buyers grant had been reduced, first-home buyers made up 21 per cent of the owner-occupier market, just 1 per cent higher than the historical average.

“We would expect that during 2010 they will sit at a similar, if not lower, level than the historical average,” Mr Kusher said.

“By anticipating that first-home buyers will at least fall back to historic average levels during 2010, we expect to see a turnaround in rental markets, with higher rents throughout the year, and expect that with less competition, investors will become more active in the marketplace.”

On a state-by-state basis, the second-greatest proportion of home loans for first-home buyers was found in Victoria (26.9 per cent), followed by NSW (26.8 per cent).

The markets that had the lowest proportion of first-home buyers during 2009 were South Australia (20.6 per cent), Northern Territory (21.1 per cent) and the ACT (22 per cent).