First Home Buyers Driving House Prices Up

Australian house prices are on the way up, moving into neutral or positive territory for the first time since Covid-19 hit.

House prices went up by 0.9% in the September quarter and 4.6% in the year across capital city markets.

This is a great improvement across the country compared to the June quarter, where prices dropped 2% for houses and 2.2% for units following a small increase earlier in the year.

Domain senior research analyst Nicola Powell said first home buyers are driving the market while investment activity stalls.

"Consumer confidence has made a remarkable rebound, boosted by the federal budget, success in containing the coronavirus and the prospect of further interest rate cuts," Powell said.

"Strong buyer demand has absorbed rapidly rising new supply. With fewer investors and foreign interest, first-home buyers are taking advantage of the reduced competition, government incentives, and low mortgage rates."

Powell said government initiatives have stalled distressed sales keeping the market intact for now.

"The proposed relaxing of lending standards early next year and the imminent prospect of an interest rate cut will encourage people to borrow."

"However, with less scrutiny placed on borrowers it will become easier to take out a mortgage, making access to credit simpler and quicker—this is likely to boost demand for housing and, in turn, support home values."