Amanda Watt
A reduction in the proportion of first-time home buyers in the market in November to its lowest level since June 2004 highlights the difficulty that many Australians face in buying a home, according to the head of banking business act., Amanda Watt.
In sobering new data, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 14.9% in November 2015 from 15.0% in October, its lowest proportion since June 2004 when it was just 14.3%, according to the new data from the Australian Bureau of Statistics (ABS).
Over the month, the value of new home loans taken by property buyers rose 1.8% to $33.3 billion. The value of home loans for owner occupiers rose a healthy 2.4% to $21.8 billion in November from October, according to housing finance data released today by the ABS. The value of home loans taken by investors rose a more modest 0.7% to $11.5 billion after falls in earlier months. The overall number of home loans taken by owner occupiers in October rose 1.8% to 56,798.
“First home buyers are pulling out of the market, with the proportion of buyers well down on its highs of around 30% in 2009. With property prices very high in some cities, especially in Sydney and Melbourne, this is stopping young Australians from taking a home loan and entering the property market,” said Watt.
“However, with some signs that demand for property from investors is cooling from its 2015 highs, including a fall in auction clearance rates in some cities and falling house prices in Perth and Darwin, as well as slowing price growth elsewhere, this could improve the outlook for first-time buyers in 2016,” said Watt.
The average loan size for first home buyers fell $1,000 to $354,500. The average loan size for all owner occupied housing commitments rose $3,700 to $386,100.
“It appears that demand for housing from investors is cooling due to the steps taken by Australian regulators to stem demand. This could work to take pressure off property prices this year, opening the way for more first-time buyers to make their first home purchase,” said Watt.
In May, banks tightened lending criteria such as loan-to-value ratio (LVR) after the Australian Prudential Regulation Authority’s introduced supervisory measures to cap the growth of investor lending. In June, APRA released a temporary directive to five banks requiring them to increase the capital they hold against their residential mortgage exposures.
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