09/07/2008 - 22:00

New options for first homebuyers

09/07/2008 - 22:00

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It's widely acknowledged in the housing industry that first homebuyer activity underpins the overall market, but with rising interest rates and strong price growth, many buyers have been forced out of the market.

New options for first homebuyers
NICHE MARKET: Affordable housing projects such as Australian PRoperty Alliance\'s The Niche in Bentley, are helping to attract first homebuyers back to the market. Photo: Grant Currall.

It's widely acknowledged in the housing industry that first homebuyer activity underpins the overall market, but with rising interest rates and strong price growth, many buyers have been forced out of the market.

Despite this, several initiatives from the state government and private sector have provided a boost over the past six months.

Perth-based residential developer Australian Property Alliance is one company expanding its affordable housing product, The Niche, which consists of high-density house and land packages priced from $299,000.

Each house is built according to a common architecturally designed model, containing three bedrooms and two bathrooms.

Marketing and sales director Ronnie Elhaj said the company had purposely targeted established suburbs in close proximity to transport links, which would be attractive to investors, rather than greenfield sites in outlying suburbs.

He said the product was more affordable because it was high density, with design and fittings duplicated throughout the development.

"As a group, we're able to negotiate aggressively with building companies and buy in volume from suppliers, to get economy of scale," Mr Elhaj told WA Business News.

Since 2005, The Niche has built 86 houses in Bentley and Armadale, with a further 77 soon to be released in Kelmscott.

It also owns sites in Langford, Beechboro and Ballajura, which are currently awaiting approvals.

Also active in the affordable end of the market is Cedar Woods, which has lodged plans with the City of Rockingham to build a new modular product as part of its River Gums development in Baldivis.

The company's manager of planning and sustainability, Karl White, said a lot of time had been spent researching different models, with a modular panel and steel-frame product eventually chosen.

Mr Woods said the product, by East Perth-based builder 2020 Construction Systems, was an apartment-style dwelling built on small lots, containing two bedrooms and one bathroom.

Priced at $80,000, the base house can be extended as required.

"First homebuyers don't need to carry the burden of a four-by-two when they're entering the home owner market," Mr Woods said.

"With this, we can expand the homes later, and the completed model is comparable in price to the current entry point for a four-by-two, which is about $140,000."

Mr Woods said reducing the size of lots was critical to solving the affordability problem.

"We have done some research with building companies to find the smallest lot that can contain a family dwelling without going to two storeys, and we've found that 270 square metres is about as small as you can go," he said.

To this end, Cedar Woods has created a second design, which it plans to use in its upcoming Harrisdale joint venture development with the Department of Housing and Works.

Under the subdivision, each house will have rear laneway access to allow a strata titled, one or two-bedroom apartment to be built on top of the garage.

Mr Woods said the company would initially build several display models.

"This model eliminates the land component [of the cost], as it's only using between 40 to 60sqm of land," he said.

Other initiatives that have been introduced this year include two joint venture developments by the Department of Housing and Works, in Dalyellup and Ellenbrook.

The latter, being undertaken by LWP Property Group Pty Ltd, has house and land packages for $305,000 and above, available under the government's shared equity First Start scheme.

In a positive sign for the market, the Keystart program - including First Start - has had a boost in recent months, reaching a four-year high of 341 loan approvals in April.

About one third of the $73.5 million in loans written was approved as part of First Start.

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