Affordable Property Prices Rising

Growing demand by first-time buyers means Australia’s more affordable property markets are experiencing the strongest price growth.

Analysis by Cotality shows that since October last year, properties with an estimated value below the 5% deposit guarantee scheme price caps have recorded stronger growth than higher-priced homes.

The scheme allows first-time buyers to secure a home with a deposit as low as 5%. Homes need to be below a certain price threshold to be eligible.

In the six months since the scheme was expanded, properties under the price threshold have increased in value by 6.7% compared with a 3.6% increase for properties with an estimated value above the threshold.

Cotality research director, Tim Lawless, says there are several factors which may explain the stronger growth at lower price points.

He says the expansion of the scheme has “brought forward” buying plans, serviceability constraints are pushing demand toward lower-priced properties and investors are competing with first-home buyers in the affordable end of the market.

Lawless says that the pattern of stronger growth in values in below price threshold markets is consistent across every capital city and regional market except for Regional Western Australia and the Northern Territory.

“Overall, the expanded deposit guarantee appears to have amplified demand for lower-priced homes, adding to competitive tension for more affordable housing options and contributing to faster growth in this segment compared to higher-priced properties,” he says.