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South Australia’s love affair with home renovation is causing a major stumbling block for first home buyers wanting to get into the property market, according to industry experts.
Figures from the Australian Bureau of Statistics (ABS) show that more than $320 million worth of residential building alterations and additions were approved in South Australia the last 12 months.
HomeStart Finance Chief Executive Officer, John Oliver, said that while these figures are good news for the building and construction sector, renovators are adding yet another hurdle for first home buyers to overcome.
“A healthy home buyer cycle has a good balance of first home buyers and ‘upgraders’, who transition from their first home to their next home within a few years, clearing a pathway for first home buyers to enter the market,” Mr Oliver said.
“But what we’re currently seeing is many ‘upgraders’ deciding to sit tight and focus on renovating rather than selling up and moving on.
“This has contributed to stalling the home buyer cycle and takes away a major source of affordable housing that in the past would have provided a pathway for first home buyers to start sooner.”
Real Estate Institute of South Australia (REISA) Chief Executive Officer, Greg Troughton said the high upfront costs for home buyers could be driving the state’s home renovation trend.
“When you take into account stamp duty and land tax, South Australian homebuyers face very heavy upfront cost imposts when buying a home,” he said.
“Even with record low interest rates, we see the important first rung on the property ladder not being reached by first home buyers. This no doubt, will have a major negative ratchet effect on the whole property selling cycle.
“It’s time for the State Government to review the taxation regime and fix this problem which is holding so many people back from buying property.
“Home buyers shouldn’t have to face these heavy taxes every time they purchase a property and it’s a systemic problem that is impacting on the home buyers’ cycle at every level.”
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