First home buyers at historical lows, investors dominate: Industry reactions

First home buyers at historical lows, investors dominate: Industry reactions
First home buyers at historical lows, investors dominate: Industry reactions

The Australian Bureau of Statistics’ housing finance statistics for April 2014 have maintained that first home buyers are still keeping out of the market, with figures at historical lows of 12.3%.

This 12.3% figure was also noted in November 2013, ticking up to 12.6% in March 2014.

The Real Estate Institute of Australia’s president, Peter Bushby, noted that increases were recorded in six of the states and territories: Queensland, Western Australia, the Australian Capital Territory, Victoria, South Australia and Tasmania. The ACT had the biggest increase, of 0.9%.

New South Wales fell by 0.9% while the Northern Territory remained flat.

When excluding refinancing, April saw a drop of 0.1% in owner occupied finance commitments in trend terms.

“In trend terms, the number of commitments for the construction of new dwellings climbed 1.1% and the purchase of established dwellings increased by 0.1%. However the purchase of new dwellings fell by 1.3%,” said Bushby.

Investment housing commitments increased, but by 0.5%, which follows three years now of monthly increases that were not as modest.

“The April 2014 lending figures indicate a stable market, and signal a period in which interest rates should stay at their current levels,” he said. You can read more about interest rates and predictions here.

ANZ Research’s David Cannington and Paul Braddick noted that mortgage commitments are “easing in line with moderation in housing market sales and price growth”.

“Today’s data continues to reflect a housing market dominated by investors and upgraders/downsizers, while first home buyer activity remains at historical lows,” they re-iterated.

It was suggested that sentiment has had some impact over recent months, however housing finance was noted to be at a new historical peak with the value of finance commitments 1.7% higher over the month.

Over the year to April, housing finance was 20.7% higher.

This has Housing Industry Association chief economist Harley Dale noting that there is upward momentum to the lending for construction of new dwellings, even when allowing for a decline in the seasonally adjusted number and value of loans in April.

“Over the three months to April 2014 the number of construction loans increased by 5.4% to reach the highest quarterly level since early 2010,” said Dale.

“In value terms the profile is very similar.”

“Today’s update is consistent with further growth in detached and low density dwelling construction into the new fiscal year,” he said.

“Meanwhile a modest downward trend in lending for the purchase of new dwellings still signals historically elevated levels of medium-high density construction being maintained in 2014-15.”

He also noted that the value of lending for investment in new rental stock is now at its highest since before the GFC.

Housing finance statistics: February

Housing finance statistics: March

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

First Home Buyers

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