Pent-up demand from first-home buyers and softer house prices are likely to trigger a mild resurgence in the residential property market this year, a non-bank lender predicts.
Resi Mortgage Corporation says with most investors likely to remain cautious in 2006, first-home buyers could expect an easier time negotiating property deals.
"First-home buyers began returning to the market in 2005, but the figures have still been quite low compared to 2001, when 26 per cent of all loans went to first-home buyers," Resi's consumer advocacy manager Lisa Montgomery said.
"And we have not even begun to tap the pent-up demand from the many who held off entering the market in 2003 and 2004."
She said more than 20 per cent of loans could go to first home-buyers in 2006.
High property prices had been the biggest deterrent for first-timers who were beaten in the purchase scramble during the recent property boom by more cashed-up investors.
However, Ms Montgomery said this deterrent had since waned with low interest rates - not expected to rise significantly in 2006 - assisting new home buyers.
"The Federal Government is still offering its first home owner's grant of $7,000 and most state governments are offering worthwhile stamp duty concessions for first home buyers," she said.
"Smaller deposits are required to get into the market and a number of lenders are offering more flexible products for this sector of the market."
While 'mum and dad' investors were expected to remain cautious in 2006, more seasoned investors would look to start making purchases.
"I think those people who see property as a long-term investment and aren't just after short-term gains will be putting their foot in the water again in 2006," Ms Montgomery said.
Another development tipped for 2006 is a consolidation of a crowded mortgage market.
"There would be a number of players in the market at the moment who got in towards the end of the property boom and didn't get the chance to build much of a business," Ms Montgomery said.
"They have probably just been hanging on in last year's weaker market and I think we can expect greater consolidation of these players this year."
