MANY renters are buying their first home rather than fork out for exorbitant rent, new research shows.

According to RP Data research analyst Cameron Kusher weaker market conditions across most capital cities means there are opportunities to find bargains.

First home buyers are dipping their toe back into the market while prices and interest rates are low.

New research has revealed they are more confident about buying a house now than they were six months ago.

Rising rents is one of the key factors that has first-time buyers considering if it is time to take the plunge.

Latest CBA/Mortgage & Finance Association of Australian research has found that current high rents mean two-thirds of first-time home buyers were re-evaluating the trade-off between renting and buying.

It found about 17.2 per cent of first-home buyers were planning to enter the housing market sometime in the next 12 months.

But almost 70 per cent say they are still holding back due to the fear of servicing higher debt mixed with a fear of future job redundancies.

About two-thirds of first-home buyers believe rentals are too expensive, and about 40 per cent feel they are caught in a rental trap, according to Commonwealth Bank executive general manager of third party banking, Kathy Cummings.

She says in many cases it is cheaper to buy than rent and first-home buyers appear to be working productively towards raising the required deposit to get into property.

Emma Raphael of Place at Camp Hill in Brisbane says that is what many of her recent clients have been telling her.

She has worked in real estate for almost 12 years and says lately she has seen an increase in potential buyers in the Generation Y group.

"But while I think they are being a little bit cautious, I think confidence is definitely being restored," she says.

She believes many have come out looking following interest rate drops and predictions of more.

She says rising rents is also something many are telling her is encouraging them to investigate the market.

"The mind set has shifted - they are prepared to forgo going out to dinner once a week, they reckon it is a pretty good sacrifice to make," Ms Raphael says.

Lachlan Walker of Place Advisory says potential Gen-Y buyers seem to be researching the market. "That is starting to happen now, we've got a lot of people coming out to open homes, a younger demographic attending open homes and offices. Those committing is still fairly minimal," he says.

Mr Walker says rising rents and dropping vacancy rates are leading to more considering entering the property market for the first time.

"That is definitely driving the propensity to buy I suppose, because when you are spending $550 to $600 a week on your rent it becomes more feasible to purchase that property for $450,000," he says.

"Yes, you have to sacrifice because (when renting) we want everything at our fingertips, want to be close to town, infrastructure and amenity. That has got to be sacrificed - you have to go a bit further out."

News Ltd

Residents and owners of strata-titled homes in NSW need better support and clearer explanations of the responsibilities that come with living in such property, a UNSW study has found.

The study, released on Monday, found that while 59 per cent of strata owners thought their fees were appropriate, many were confused about the exact responsibilities of strata management, lead author Hazel Easthope said in a statement.

Residents were also uncertain about who was responsible for funding major repairs to buildings, with 39 per cent of the 1550 people surveyed and interviewed saying they had problems regarding the management of their scheme.

"People need more information and understanding generally about how things work," Dr Easthope told AAP.

"It's not just government intervention that's needed, it's not just legislation that's needed, but it's also a wider consumer education and information and support that's needed."

People who buy a property governed by strata enter a legally binding relationship with their neighbours for the communal upkeep and maintenance of their property, Dr Easthope said.

"When you buy a strata lot you're buying the airspace inside the wall and then you're buying a joint share in everything else.

"You're also buying a joint share in the responsibility to maintain (the property and the grounds)."

finance.ninemsn.com.au

THE most comprehensive study ever of strata properties has found 85 per cent of new apartments in NSW are plagued by defects. The results of the two-year, federally-funded University of NSW study reveal major problems with compliance and management of multi-unit dwellings, which accounted for 75 per cent of properties built in Sydney in the five years to 2009.

Researchers surveyed 1550 strata owners, managers and peak bodies. Seven out of 10 owners reported building defects in their properties, with water leaks and internal and external cracks the most common.

Newer apartments were the worst, with 85 per cent of owners surveyed in buildings constructed since 2000 reporting defects. In three out of four cases, these were yet to be fixed. In most of these cases, the builder or developer controlled the strata scheme and was slow to act, or the builder was no longer operating and so could not fix the defects.

The president of Owners Corporation Network Australia, Stephen Goddard, said the City Futures Research Centre study confirmed the conventional wisdom of the strata sector: new buildings in NSW will have defects. ''We do not live in a safe state, if that is the outcome,'' he said. ''Why have a building code if we can't comply with it 85 per cent of the time?''

Changes to planning regulation before the Sydney Olympics permitted private certification of buildings in a bid to speed up development times.

The report's lead author and research fellow at the centre, Hazel Easthope, said certification was ''not up to scratch'' between 1998 and 2004. Regulation was tightened in 2005.

''Compliance was not very good,'' she said. ''You hear stories of buildings being signed off without inspectors even going to the building.''

But Mr Goddard said the continuing state of compliance ''makes your blood run cold''.

''We have an absolutely inadequate process for certifying work, no adequate penalties for punishing falsified certifications,'' he said.

About 3 million Australians now live in strata-titled properties, including 1.2 million in NSW, where the form of home ownership was first introduced in 1961. Almost a quarter of people living in the Sydney metropolitan area live under strata title.

The report found parking, noisy neighbours and breaking by-laws were the biggest source of disputes. Managing schemes proved problematic for 39 per cent of strata owners, with the necessity of repairs and who should pay for them common sources of conflict.

Mr Goddard said the focus needed to shift from aiding developers constructing flats to helping people come to terms with living co-operatively within them. ''People do not understand strata title and its consequences,'' he said. ''They are told they have a certificate of title but they discover you can't do with it as they wish.''

Dr Easthope said strata was a new form of civic relationship, where owners found themselves in a legally binding relationship with their neighbours for the communal upkeep and maintenance of their property. ''Owners corporations are … like a small level of government but with very little support.''

The Governing the Compact City report, to be launched today by the Fair Trading Minister, Anthony Roberts, comes as the government undertakes its own review of strata law.

SMH

In 2012, First-home buyers benefit from a 20% reduction on their stamp duty bill. That means that on the purchase of a $400,000 home they will save $3,274 and on a $550,000 home they will save $4,994. The stamp duty reduction is not available for homes priced over $600,000.

The good news is that on January 1, 2013 the cut to stamp duty will increase from 20% to 30%. That means that on the purchase of a $400,000 home they will save $4,911 and on a $550,000 home they will save $9,321.

The stamp duty cut will then increase to 40% on January 1, 2014 and then to 50% on September 1, 2014.

www.sro.vic.gov.au

Currently the only stamp Duty relief offered to NSW buyers are for new homes only up to $600,000 known as the First Home - New Home scheme.

 A Melbourne real estate agent has had his licence suspended for underquoting, following a two-year battle with the state’s watchdog and courts.

The Victorian Civil and Administrative Tribunal withdrew real estate agent Dean Anthony Johnson’s licence for two months, reprimanded him, and ordered him to provide proof for the next two years that he is not marketing properties to would-be buyers at prices below the minimal price set out by the sellers. Mr Johnson is a director  at Footscray-based Wayne Sweeney and Associates.

Mr Johnson had already paid $5000 in fines to the Victorian Property Fund in March 2012, after Consumer Affairs Victoria brought the case against him. VCAT found he had misquoted on four properties in the Melbourne suburbs of Maidstone and Yarraville. Another agent Darren James Dean was also charged by VCAT in 2010, as well.

Mr Johnson successfully appealed the 2010 the judgment to the Supreme Court, which then sent the matter back to VCAT for its latest decision this month.

“Buying a home is usually the biggest financial outlay in a person’s lifetime and laws are in place to protect consumers from misleading advertising and underquoting,” said Consumer Affairs Victoria director Dr Claire Noone.

‘‘Licensed estate agents should be aware of their obligations under the Act and the Australian Consumer Law in relation to advertising properties,’’ she said.

David Leggatt of law firm DLA Piper said Mr Johnson broke the law for not advertising properties in strict compliance with the Estate Agents Act.

"Dean’s error was that he altered the advertising campaign on his client’s instructions, without altering the agent’s authority in writing," Mr Leggatt said.

Mr Leggatt said Mr Johnson advertised four properties at prices outside the range stated in the agent’s authority, with two of the properties selling for less than the advertised price.

Mr Leggatt said no complaint had been filed by the public or Mr Johnson's clients.

Property buyers in Melbourne have long contended that agents underquote prices on properties to lure prospective buyers, although typically there is little hard evidence of the practice.

smh.com.au

If recent interest rate shifts don't pique greater FHB interest, Australian housing is likely to suffer further price falls..smh.com.au/business/firsthome-buyers-thin-on-the-ground-20120515-1yoj7.html#ixzz1v4kNWKbU

This week’s Housing Finance data release offered some new clues on the immediate future of house prices. The headline numbers were broadly reported, including here at BusinessDay but one dimension that as missed was the contribution of first-home buyers to the result.

Back in February, this columnist made the these comments about the upswing in housing finance commitments in December 2011 on the back of strong first-home buyer (FHB) demand:

No doubt the housing-addicted broader media will argue that the recent upswing in housing finance commitments, as well as the renewed interest from FHBs, signals that the housing market is recovering and that solid price growth will soon return. I, however, urge caution in reading too much into these results.

We all know that the New South Wales state government announced in September 2011 that it would end the generous stamp duty concessions provided on pre-existing dwellings on 31 December 2011. Predictably, this announcement led to a surge of buying from NSW first-home buyers, which has acted to push-up the national figures in the process...

Clearly, the overall upswing in housing finance commitments nationally has been driven, by and large, by increased NSW FHB activity as buyers rushed to beat the 31 December deadline for the removal of stamp duty concessions. Given that this deadline has now passed, we can expect some pull-back from NSW FHBs going forward, which should act to reduce overall finance commitments in the months ahead.

As predicted, housing finance commitments (excluding refinancings) fell by 7.3% in the three months to March 2012 - from 31,667 in December 2011 to 29,369 - and are now hovering near decade-lows some 16% below the five-year moving average (5YMA) level.

The fall in finance commitments has been driven, to a large extent, by declining interest from FHBs. The number of FHB commitments nationally fell by 19% in the first three months of 2012 and was 24% below the 5YMA as at March 2012.

Similarly, the share of total mortgages going to FHBs declined from 21% in December 2011 to 16% in March and remains well below the five-year moving average of 20% (see below charts).

With the exception of the mining states, FHB demand across Australia is weak. Note that the following charts are made up of non seasonally adjusted data, which the BAS does not provide at the state level. To smooth the result, I have  used a three-month moving average (3MMA).

First, consider New South Wales, where the number of FHB finance commitments have almost halved since December 2011 on the back of the expiry of the FHB stamp duty concessions.

The number of FHB commitments (3MMA) in March 2012 was 35% below the 5YMA level, whereas the FHB share has plummeted to only 12% - well below both the level in December 2011 (26%) and the 5YMA level (22%).

Next, Victoria, where the number of FHB commitments have fallen 7% since December 2011 and were 27% below the 5YMA level. Similarly, the share of total mortgages going to FHBs commitments was only 18% in March 2012, well below the 5YMA level of 21%.
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The Gorgon gas project is projected to stimulate another housing boom in WA.

Won't be too many of these scenes until first-home buyers return.

South Australia's FHB finance commitments are also very weak, with the number of FHB commitments some -30% below their 5YMA, with the FHB share of total mortgages (14%) also well below the 5YMA (17%).

But the weakness in the non-mining and national averages does disguise better news for the mining states. In Queensland, FHBs have made a come back. While the number of FHB commitments remained 17% below the 5YMA in March and roughly equal to December 2011, they are well up on the lows reached in early 2011. The share of total mortgages going to FHBs commitments (19%) was also just above the 5YMA level.

It's a better story still in Western Australia, where the number of FHB commitments have been trending up strongly, but remained 5% below their 5YMA level in March 2012. FHB's share of total mortgages (20%) were also only slightly below the 5YMA level (21%).

The FHB market, along with investors, are the key source of new mortgage demand and chief enablers of the upgrader market (since second time buyers typically sell to FHBs or investors). The overall drop-off in FHB demand over the first quarter of 2012 is a worrying sign for the Australian housing market which, according to RP-Data Rismark, is losing steam fast.

smh.com.au

When the GST came along on July 1, 2000 there was the "promise" that lots of other taxes, duties and charges, in particular state taxes would be abolished or at least reduced. But in the intervening years changes have been minimal and only at the margins, for example mortgage duties have been abolished in most states.

A policy change to remove or reduce the payment of stamp duty applied to real estate post-GST was and still is an illusive target. Today there are few indicators that any big changes are coming our way in the near future.

This is not to suggest that change will never come, in fact just the opposite. Various state governments are happy to use stamp duty concessions to stimulate various sectors of the market. They have become very comfortable with the idea of making concessions that are in reality no different from a promotion that a developer might offer.

Common incentives on offer can frequently target first time buyers, or older buyers or aim to stimulate construction activity. Sometimes these target groups are seen as disadvantaged and stamp duty savings can then be promoted in combination with other grants, like the FHB grant to directly stimulate activity.

However, this on-again, off-again approach can create market distortions and when the central idea is for example to stimulate the construction of new homes, it’s hard to argue why this application of stamp duty should not be removed permanently.

And I would have to suggest that such a change would need to be a national initiative. New construction is a major driver of economic activity and it has a huge flow on affect that runs deeply into many sectors of the economy and so the benefits appear obvious.

A national approach is desirable, to avoid different states simply chasing policy so their local market is not disadvantaged. Lets change the rules in this or that state so that an adjacent state does not gain all the advantages, appears to be a common theme. A national policy would also present a uniform market for international buyers looking at Australia, and avoid a major influx into any particular state. Again with the possibility of creating a local distortion.

The under supply of dwellings in almost all major markets is further reason to consider this permanent change to duty and with a predicted national undersupply of 170,000 forecast for 2013 (Source: BIS Shrapnel) removing stamp duty would hopefully kickstart the resources necessary to overcome this shortage.

Older buyers have a role to play

But this is not a simple area of policy, the predicated undersupply of new homes also needs to be compared with the already established housing stock, and there are some very interesting trends here that are for instance being impacted by older homeowners.

A study in 2010 by the Australian Housing and Urban Research Institute found that 84% of homes occupied by people over 55 were living in a home with one or more spare bedrooms. And while some of this spare capacity would be used for family or lifestyle reasons, downsizing was possibly being restrained by the impact of stamp duty.

In NSW there is an existing concession, where the Senior’s Principal Place of Residence duty exemption applies to people between 55 and 65 years of age buying a new house before 1 July 2012 when the concession is set to end.

Stamp duty concessions for older people downsizing would see more homes in established areas released onto the market and this would also have the impact of better utilising of existing infrastructure, as many of these homes would be in established areas.

Here I can see good reason for such a policy as funding new infrastructure is almost always sighted as one of the main reasons that high council levies apply in new residential development areas. But could I also suggest that this type of ‘recycling’ of existing homes and local infrastructure could be a solid argument to collect less stamp duty.

Such stamp duty incentives do produce structural change in the market as we have seen recently in Sydney. The $600,000 cap on the current NSW Home Builders Bonus has for example seen a big lift in the number of one-bedroom apartments coming onto the market, and they have proved popular with investors and first time buyers.

Post June 30 – what will happen in NSW?

When it comes to the undersupply of housing, I have already highlighted that NSW has the biggest shortfall of more than 101,000 dwelling forecast for 2013, and construction activity has lagged for many years. And this is even with some large land release area’s opening in the cities south-west and north-west.

Activity simply refuses to budge and this is despite what should be a big level of pent up demand, and yet regardless of the shortfall demand has failed to greatly boost construction. The pressure from pent up demand is somehow not materialising.

And while there will never be one simple answer, the impact of stamp duty must be counted among the reasons, and this would suggest that the current concessions for First Time Buyers should be extended across the entire market. The FHB market does not exist in isolation and market-wide activity would benefit.

A more general concession at a realistic price level and possibly over a sliding scale could help generate more extensive market activity.

Some may still argue that this could further dampen affordability if the exemptions for stamp duty was not only limited to first time buyers, but we need to keep in mind that there are other FHB grants and also these same buyers would have access to a wider choice of locations helping to create a deeper market.

The case for change

Stamp duty on real estate transactions is a big source of revenue for every state government. This is essential revenue, but does the burden fall fairly and is the ‘tax’ more complex than it needs to be. Clearly every state and territory government is happy enough to use stamp duty as a form of concession with varied and ongoing schemes, and so there are many precedents of sorts for change.

Australians generally pay stamp duty on all property transfers (accepting that there are varied and ongoing concessions) but on our principal residence we pay no capital gains and in 2012-13 according the Federal Treasury that concession will cost the federal budget $35.5 billion, that’s almost 9.5% of all federal government expenses.

Any move to change this policy would be almost impossible, but it is perhaps the absence of a CGT that permits other high property taxes, including stamp duty to be justified.

Stamp duty concessions are almost always tipped in favour of first-time buyers, and associated with new homes, but questions remain as to what impact this has on building activity. This is also as noted a more complex area because the concessions vary between states and they are almost always transitory.

Stamp duty is an unpredictable tax for the states and despite the cash flowing from the GST the revenue would need to be captured from other structural changes in the economy. But clearly stamp duty remains a barrier to everyone in the housing market, young, old and even those looking for greater flexibility with employment are possibly constrained by its impact, being reluctant to move.

There are, however, some more immediate changes possible that could include greater indexation of rates of duty, including the permanent removal of duty for first-time buyers and some appreciation of the fact that the duty applies to the final price of a new home where there would already be many other layers of taxation. When the duty is paid is also an area where policy could be modified, helping to reduce the up-front costs of buying a residential property.

With the NSW state budget set to be announced in two months' time, will change result with the possible application of duty concessions to the wider market?

However, let's hope that we do not take a lead from Queensland, where from August 1 last year stamp duty for owner-occupiers on property purchases increased. But in contrast at the same time to stimulate the building industry, discounts on stamp duty for anyone buying or building a new home were introduced, leaving existing dwellings to bear the brunt of the increases. That’s a mixed message by any conclusion.

By Peter Chittenden who is managing director for residential of Colliers International

 propertyobserver.com.au

THE number of first home buyers in NSW has plunged since the state government killed stamp duty concessions.

In figures released yesterday by the Australian Bureau of Statistics, the number of first home buyers in NSW has fallen almost 50 per cent in the three months since the concession was taken away.

In the budget last year, treasurer Mike Baird announced that from January, first home buyers purchasing existing homes would have to pay transfer title charges on properties under $600,000.

Exemptions now only apply to houses that are newly built or bought off the plan, about 20 per cent of the market.

The treasurer said the ABS results could not be attributed solely to the removal of the stamp duty concession.

"Although disappointing, today's result is not surprising as the weakening national economy continues to dampen confidence. Despite this, first home buyer approvals were still 7 per cent higher in the first quarter of this year than they were in the same quarter last year under state Labor," Mr Baird said.

"While recent cuts to interest rates should provide some relief and support to the housing market, the NSW government has acknowledged that housing supply remains a key challenge across the state and more needs to be done to support this important segment of our economy."

Opposition Leader John Robertson said in a period in which interest rates were being cut, it was not a good look to have fewer new buyers entering the housing market.

"The numbers speak for themselves. Barry O'Farrell has locked first home buyers out of the housing market," Mr Robertson said.

NSW is one of the few states that does not have a stamp duty concession for property newcomers.

In the three months to May this year there were 6205 first home buyers in NSW, but in the three months prior there were 11,715.

In December, the figure spiked to 4280 - the highest in 12 months - with first home buyers rushing to take advantage of the concession while it was still there.

When he announced the concession would be scrapped, Mr Baird said it was a tough decision but would save $1.1 billion over four years.

"We recognise this is a difficult decision, but we believe it is necessary to make buying a new home relatively more attractive than buying an existing dwelling for first home buyers," Mr Baird said.

The First Home Plus and First Home Plus One schemes offer full transfer duty exemptions for newly built homes up to $500,000, and sliding partial exemptions from $500,000 to $600,000.

news.com.au

POOL warranties issued to thousands of Queensland homeowners are in doubt because the industry peak body administering them has drained millions of dollars from the trust fund used to pay claims.

Customers having pools built by members of the Queensland Swimming Pool and Spa Association (SPASA) each pay about $300 into the so-called "Watertight" fund for a six-year warranty to ensure that if the builder dies or goes bust their pools will be finished and subsequent defects rectified.

But The Courier-Mail can reveal that a significant proportion of almost $7 million paid into the fund over the past 10 years has been siphoned off into a loss-making training venture that has nothing to do with consumers.

SPASA Queensland itself is also in a financial crisis. It is set to call for emergency funding from members and is looking to sell its Newstead office building to stay afloat.

Chief executive Adrian Hart assured customers claims would be honoured, despite having less than $30,000 left in the trust.

"The fund is treading water at the minute but we haven't had, nor do we expect, much in the way of claims," he said.

Mr Hart, who took over in October, has hired lawyers to investigate what happened to the trust fund under the previous management.

Financial documents seen by The Courier-Mail show that at one point the trust had more than half-a-million dollars in the bank, but by the end of 2011 the fund's only significant asset was a $500,000 loan to SPASA Queensland used to buy the Newstead building.

Since 2002 the trust has collected $6.8 million from customers, from which about $1.2 million has been paid out in claims.

About $2 million was transferred in "grants" to NSPI Australia, a loss-making training organisation run by SPASA to help pool builders qualify for Building Service Authority licences. Some trust money was used to fund the operations of SPASA.

Under the trust deed the only specified beneficiaries are SPASA members' customers. 

couriermail.com.au

In some rare good news for the struggling housing market, home loans have posted a surprise rise.

Home loans rose 0.3 per cent in March, following a 2.5 per cent decline in February, the Australian Bureau of Statistics said today. Economists polled had predicted a 2 per cent fall for the month.

“It’s an okay result,” said JPMorgan senior economist Ben Jarman. “It’s telling us things weren’t too weak going into the RBA’s 50 basis cut which they delivered a couple weeks ago.”

Growth in Australia’s housing market has slowed over the past year with mixed signals about interest rates and the health of the economy keeping buyer activity subdued.

This month, the Reserve Bank cut interest rates by 50 basis points, with banks passing along the majority of the reduction to borrowers.

Auction clearance rates, a forward looking barometer of the market’s health, perked up over the past weekend. Melbourne’s auction clearance rate was a healthy 63 per cent last weekend, according to the Real Estate Institute of Victoria.

In Sydney it was 61.8 per cent, according to Fairfax-owned Australian Property Monitors.

The ABS said that the value of total dwelling loans fell 0.5 per cent, seasonally adjusted, to $20.18 billion in March.

The number of first home buyer loans as a share of total owner occupied home loans, dropped to 16.4 per cent in March 2012 from 17.2 per cent in February 2012.

smh.com.au