House price surge shoulders most blame for blocking first homebuyers: RBA research paper

first_imgA fall in first homebuyers in the past decade was almost exclusively because of prices. Picture: AAP Image/Dave Hunt.SURGING housing prices were almost exclusively to blame for shutting out a generation of Aussies from owning a home, latest Reserve Bank research has found.An RBA paper out today warned that higher housing prices were responsible for almost all the drop in first homebuyers since 2008.More from newsMould, age, not enough to stop 17 bidders fighting for this homeless than 1 hour agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investorless than 1 hour agoResearchers John Simon and Tahlee Stone said housing prices were responsible for creating ‘generation rent’ because “fewer potential FHBs are actually able to enter the housing market and purchase a home than before”.“We find that potential FHBs today are less likely to take on a mortgage and purchase a home than those earlier in the 2000s. Our results provide evidence that FHBs are being crowded out of the market by higher housing prices,” the paper said. The RBA research paper said generation rent was a consequence of the house price surge. Picture: AAP Image/Dean Lewins“It seems likely that this is related to external factors, such as investor demand and supply constraints in some cities, although we have not examined that channel here.”The RBA research paper said while demographic factors were important determinants of home buying, they had not been changing drastically since the financial crisis to account for the fall in FHB numbers.“That is, people do not appear to be merely delaying the age at which they purchase their first home. In short, ‘generation rent’ appears to be an important phenomenon that is related to the rise in housing prices rather than a shift in preferences or changing demographics.”last_img