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The record level of purchases by first home buyers have started to taper down and will continue to do so in the months ahead, according to the Real Estate Institute of Australia (REIA).
REIA president David Airey said he expects to see the number of first home buyers drop back down to normal levels after seeing a 50 per cent increase on the usual market number over the last financial year.
"The reduction in first time buyers will certainly have an effect in the $250,000 to $450,000 price range, which is typically where these buyers aim for.
“Properties in this range could see sales decline but it will be a limited affect and probably not noticeable until the first quarter of next year," Mr Airey said.
According to Mr Airey the boost, not interest rates, will have the biggest effect on first home buyers.
"While interest rates are a worry, responsible lenders have been pricing in interest rate rises for quite some time when they calculate the borrowing capacity of first home buyers,” he said.
"Given that we have been expecting up to about a two percentage point increase for some time, it should be in the capacity of most people."
Resi consumer advocate Lisa Montgomery agreed with Mr Airey and said the 25 basis point increase was not enough of a rise to truly affect first home buyers.
"It might make some people more cautious but it shouldn't knock too many out of the market altogether,” she said.
"Buyers really need about a 2 per cent buffer to keep them prepared for further rises over the next one to two years.
"I think those first home buyers in play at the moment will stay in play until they lock in a purchase. Winding back the boost payments for these buyers really isn't going to make much of a difference either.
"With low-end prices at $300,000-plus, the cut-back of a few thousand dollars in a bonus grant should not stop anyone from making their purchase.”
