Australian First Home Buyers Struggle Amid Rising Property Prices and Looming Unit Shortage - Property Inc

Australian First Home Buyers Struggle Amid Rising Property Prices and Looming Unit Shortage

In recent years, the Australian property market has experienced significant shifts, with first home buyers facing challenges due to skyrocketing prices and the looming threat of a critical unit shortage.

According to a recent analysis by CoreLogic of ABS data, the latest property boom from October 2020 to April 2022 witnessed one of the sharpest declines in first home buyer activity in two decades. The number of new loans awarded to first home buyers plummeted from over 16,000 a month to below 10,000.

Eliza Owen, CoreLogic’s head of Australian research, highlighted that the removal of incentives meant to support first home buyers played a significant role in these trends. She explained, “The data shows when the market starts to pick up, first home buyers can’t keep up with the pace of increase and the deposit hurdle becomes more pronounced”. Matthew Hassan, Westpac’s senior economist, reiterated the impact of the end of the HomeBuilder scheme on the decline of first home buyer activity.

Meanwhile, the Australian property market is also grappling with a critical unit shortage. A revision by the National Housing Finance and Investment Corporation (NHFIC) warns of a deficit of 175,000 housing units, with nearly 59% of the shortfall expected in the unit market.

Unit building approvals experienced a 19.9% decline in July, and they were 39.8% below the decade’s average, as noted by CoreLogic economist Kaytlin Ezzy. Despite a surge in demand, economic uncertainties, rising construction costs, and a tight labor market are hampering construction efforts. Ezzy remarked, “Despite surging demand, developers and consumers alike are exercising a more cautious approach”.

The demand is further intensified by strong net overseas migration. According to ABS numbers, a record 454,400 people were added to Australia’s population through net overseas migration by March 2023.

Ezzy predicts that while the current high interest rates and low consumer sentiment might dampen unit demand and price growth in the short term, the situation could change by 2024. She said, “With the cash rate potentially easing in 2024, greater purchasing demand could fuel a stronger price boom in the unit market at this time”.

For those looking to enter the market, Cate Bakos, a property owner/manager, suggests leveraging government shared equity programs. She remarked, “Brokers are skilled up with all the initiatives that are available out there to help them”.


Malo, Jim. “Struggling to buy a home? This graph shows why you’re not alone.” 

Tarling, Rhys. “Australian property market facing critical unit shortage as approvals fall significantly below the decade average.” 

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