First home buyer figures drop to 11-year low

ABS data shows first home buyers made up just 14.9% of owner-occupier loan commitments in November 2015

The proportion of first home buyers in the housing market has dropped to its lowest level in 11 years, despite an increase in overall home loans issued in November.

Sobering new housing data from the Australian Bureau of Statistics (ABS) showed that first home buyers made up just 14.9% of total owner occupier commitments in November 2015, down from 15.0% in October. This marks the lowest proportion of first home buyers since the previous low of June 2004, when it was just 14.3%.

Over the October-November period, the value of new home loans for property buyers rose 1.8% to $33.3 billion, while the value of home loans for owner occupiers rose 2.4% to $21.8 billion, according to the ABS. The overall number of home loans taken by owner occupiers in October rose 1.8% to 56,798.

The average loan size for all owner occupied housing commitments in the month rose by $3,700 to $386,100, while the average loan size for first home buyers fell $1000 to $354,500. First home buyer levels have been consistently dropping, with five-year lows noted over the June-July period, despite record-breaking overall housing finance and lowered interest rates.

The documented drop highlights the difficulty that many Australians face in buying a home today, especially with high property prices in cities like Sydney and Melbourne, according to the head of banking business, ‘act.’, Amanda Watt.

“First home buyers are pulling out of the market, with the proportion of buyers well down on its highs of around 30% in 2009,” she said.

“However, with some signs that demand for property from investors is cooling from its 2015 highs…this could improve the outlook for first-time buyers in 2016," said Ms Watt.

Such signs include a fall in auction clearance rates across cities, and falling house prices in Perth and Darwin, and slowing price growth in general. Ms Watt attributes this cooling to newly tightened lending criteria, following the Australian Prudential Regulation Authority’s (APRA) recent supervisory measures to cap the growth of investor lending.

In June, APRA also released a temporary directive to five banks requiring them to increase the capital they hold against their residential mortgage exposures

“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.