November 8th, 2013
While strong approval figures are good news for the market, the proportion of investors to first home buyers is raising concern in some quarters. ; With policy makers already worried about the housing sector overheating due to a high level of risky investment, this is bad news for what is a fragile economic recovery. ; The proportion of first home buyers is at its lowest level on record, dipping to just 12.5 percent in September. ; When you consider records have been collected since 1991, this is a serious and significant drop.
There were 6,363 first home buyers recorded in September, which was only the lowest level since February this year. ; However, the massive number of investors and upgraders swamped the newbies, with investment property approvals growing by 5.2 percent and owner-occupier approvals rising by 4.4 percent. ; Finance approvals to build new homes rose by 1.8 percent in September with approvals to buy new homes up by 2.1 percent. ;
According to UBS Australia chief economist Scott Haslem in a statement to the ABC, low interest rates and overall affordability is driving demand from investors and upgraders at the expense of first home buyers. ; "Housing in Australia still remains pretty expensive, but it has become cheaper than it has been for the last 10 years given the fall in interest rates and, up until recently, pretty low prices," said Haslem, adding "In contrast though, first home owners aren't seeing relative affordability, they're seeing absolute unaffordability, so I think for first home owners housing in Australia still looks pretty expensive."
Property building approvals also rose in September, reaching their highest level since early 2010. ; According to figures released by the Housing Industry Association, there was a massive 14.4 percent jump in residential building approvals in September compared with August, at 16,318 approvals for the month. ; The strongest growth was seen in New South Wales with 25.2 percent, followed by 18 percent in Victoria and 12.3 percent in Western Australia. ; While much of this growth is for multi units rather than detached houses, these results are another indicator that the property market is on the rise.
With strong growth in September for both loan and building approvals, there are clear signs that the Australian property market is back in action. ; With interest rates at a record low and financial institutions in the mood for lending, perhaps it's a good time to make contact with your favourite mortgage broker.