Gen Y, first-time buyers optimistic on housing costs

The company behind Australia’s number 1 property website, REA Group (ASX: REA), has released the annual results from its Housing Affordability Sentiment Index (HASI) survey.

The results of the HASI survey show that “the perception of affordability has improved across the country, with this year’s HASI revealing that all states and generations have experienced an increase in their sentiment towards the cost of housing over 12 months. The increase in positivity has been driven by an easing of household expenses and debt combined with increasing household savings.”

A particularly interesting finding from the HASI was that the driving force behind the improved perception was positivity from first-time home buyers and Generation Y. It turns out that Gen Y “are the most positive about housing affordability in the country, driven largely by an optimistic outlook on their financial position.” What’s more it appears that they are acting on their views with 14% of respondents reporting that they owned both a home and an investment property!

No doubt helping to drive the positive sentiment is data showing a 5.4% nationwide increase in property prices in the past 12 months as well as historically low interest rates. According to the HASI there has been a significant jump in first home buyers looking to enter the market. This bodes well for REA Group, as well as a number of other housing related stocks.

Home builder AV Jennings (ASX: AVJ) has a number of development properties throughout the eastern states, SA and Tasmania with many sites catering to the needs of new home buyers and also appealing to Gen Y clients. Likewise companies such as Yellow Brick Road (ASX: YBR) and Mortgage Choice (ASX: MOC) are well placed to benefit from the uptick in housing, as both offer mortgage alternatives to the big banks and are likely to appeal to and attract first-time home buyers and Gen Y customers.

Foolish takeaway

The property market appears to be one of the bright spots in an otherwise lacklustre economy. While the resource sector looks to have peaked and the outlook for discretionary retail sales and consumer sentiment doesn’t look overly positive, property demand and prices continue to climb. While it can be dangerous to chase trends or cycles, the property sectors may have a tailwind which investors can benefit from, if they can pick the right stocks to provide that exposure.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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