Sub $500K house prices set to slide

Subscribe free to Real Estate Business

The end of the FHOG and various other government funded benefits could see lower end house prices fall by as much as 10 per cent, new analysis from CB Richard Ellis (CBRE) has revealed.

The analysis coincided with ABS figures released yesterday that showed the number of dwellings bought by owner-occupiers in May was 29 per cent higher than in October, when the boost to the first home owners grant was introduced.

The number of first home buyer commitments increased from 28.6 per cent in April 2009 to 29.5 per cent in May 2009, the figures revealed.

CBRE’s manager of residential research, Erin Rolandsen, said first home buyers had been instrumental in propping up house prices in the sub $500,000 market.

“The fact that first home buyers have been driving this boom leaves the sub-$500,000 market particularly vulnerable once the boost is reduced from September 2009,” she said.

“In all likelihood the withdrawal of the FHOG boost at the end of December and state-based measures in July 2010 will have a dampening effect on the sub $500,000 market, slowing sales transactions and causing price reversals in the sub-$500,000 market towards pre-boost prices.

“We expect falls could reach 10 per cent from the peak in some areas depending on local market conditions.”

Since the boost was introduced, rising house prices had increased the average first home buyer loan by $20,000.

Latest News

Recommended for You

  • Dwelling approvals slide

    Dwelling approvals dropped 12.5 per cent nationwide in May, according to data released by the Housing Industry Association (H... More >>

  • House prices to increase

    House prices should recover thanks to the ongoing shortage of residential dwellings, Lend Lease chief executive Steve McCann ... More >>

  • Auction activity slides

    Australia’s auction activity was down in every capital city this weekend, with lower auction clearance rates and sales volu... More >>

  • Rental prices stall

    The median rental yields for units in Sydney, Melbourne and Brisbane fell in the June quarter, statistics from Australian Pro... More >>