First Home Buyers Still Down

November 14th, 2014
First home buyers are still struggling in Australia, with activity flat across the board and new buyers feeling increasingly priced out of the market. According to the latest data from the Australian Bureau of Statistics (ABS), first home buyer activity currently accounts for 12 percent of all owner-occupier home loans, and just 7 percent of total home loans. However, NAB has first home buyer numbers at 17.22 percent of the new home market, with under-reporting a very real concern with the ABS data.

According to the ABS, there were a total of 6,338 first home buyer loans recorded in September, up from 6,054 in August but down from 6,717 in July. ; While numbers have increased slightly over the month, the number of first home buyer loans over the year is still roughly 10,000 lower than a decade ago in 2004. ; There are a number of reasons for this decline, including rising home values and the removal or tightening of many first home buyer grant and incentive schemes.

According to the ABS, "In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 12.0% in September 2014 from 11.8% in August 2014. Between August 2014 and September 2014, the average loan size for first home buyers rose $9,800 to $310,200. The average loan size for all owner occupied housing commitments rose $8,100 to $326,500 for the same period." ;

It's important to note that ABS data only takes into account financing with first home buyer grants, which means numbers may be under-reported. ; For example, according to NAB, first home buyers accounted for 17.22 percent of the new home loan market over the past year, up from 16.56 percent in 2010. ; The ABS addressed this discrepancy directly when releasing their data, saying "Concerns have been raised that under-reporting could occur if some lenders were only able to accurately report on those buyers receiving a first home buyer grant."

While overseas investors are often blamed for the decrease in first home buyer numbers, according to NAB Chief Economist Alan Oster, this is not the case: ; "Local investors are applying more pressure to the market than foreign buyers" says Oster, with foreign investors more likely to opt for high-end apartments and other properties that are out of reach for the majority of first home buyers. ; “They’re not buying cheap stuff” says Oster, in an attempt to bust the common myth that foreign buyers are pushing first home buyers out.

In less quantifiable but equally valid data, a report by home loan broker Mortgage Choice shows increasing discontent in the first home buyer market. According to a survey of more than 1,000 people with plans to buy their first home within two years, a majority of new buyers feel out-priced of their preferred market. ; Nationally, 54 percent of aspiring new buyers don't expect they will be able to buy property in their desired location, with almost all blaming unaffordable prices. ; This figure jumps to 58 percent in NSW, as the bustling Sydney market continues to drive prices higher.