There's been a lot of press lately on first home buyers being sidelined in this frenzied property market.
The Sydney Morning Herald(SMH) recently published an article, 'Home deposit hurdle won't clear itself', stating that out of new housing loan commitments, first home buyers only accounted for 6.8 per cent of buyers in September, down from a peak of 34 per cent in May 2009. First home buyers have been on the decline since the Government winded back their generous housing deposit grants.
The SMH also stated, "...in August(first home buyers) they made up just one in fifteen borrowers in NSW and one in eight borrowers in Victoria...house prices have risen faster than incomes over time-from 2.5 times the average disposable household income in 1985 to about 4.5 times last year, the Reserve Bank estimates...home ownership rates nationally have been in decline...the largest fall is among households in the 25-44 age bracket...the share of households owning their homes outright has slumped by more than 13 percentage points since 1995-96. Almost 35 per cent of the city's households are now renting."
According to RP Data, property prices in Sydney has grown by 13.2% in 2013.
Influential business owners, wealthy individuals, investors and politicians are likely to hold several investment properties, so there's very little likelihood of negative gearing being abolished. Negative gearing alone isn't really a great incentive. It's only useful if property price growth is appreciating more than the losses being incurred.
In another SMH article, 'Investors keep first-timers out of market as prices surge', there were quotes from Nick Gunn, a first home buyer who had failed to buy a Potts Point apartment for $431k because he was out offered. He says, "...I don't think I am likely to find anywhere that I can actually afford...there are a lot of us. Basically we sit around moaning about the same thing."
Of course he can find properties that he can afford.
Instead of buying in the heart of Sydney, he might have to look further out either West or South of the city. If he and his friends decide to sit around 'moaning' that they can't afford to buy a property because they only want to buy an inner city property, then that's not an issue of affordability.
If they keep moaning about it, even property further out from the CBD will keep on increasing in price and they will be priced out of both, inner city and outer city suburbs.
Why do first home buyers think that they are entitled to be able to buy their first home in very desirable suburbs and if they can't, then they complain and say that they can't afford to buy anything? They CAN afford to buy something, they just have to downgrade their expectations and look at upgrading later.