First home buyer activity slumps to 11-year low

by Julia Corderoy13 May 2015
The proportion of first home buyers in Australia’s home loan market has hit an 11-year low as the overall home loan market hits a record high.

The value of outstanding home loans in Australia has hit a record $1.38 trillion in March, according to official figures released by the Australian Bureau of Statistics, as money pours into Australia’s property market in the low rate environment.

However, the figures also reveal that the proportion of first home buyers in Australia's home loan market is at its lowest level since June 2004. 

According to the head of new banking business at act. – a new division of Community Sector Banking, which is a collaboration between Bendigo Bank and Community 21 – the data highlights the sheer challenge faced by first home buyers to enter Australia's home loan market in spite of the recent reduction in home loan lending rates. The majority of act. customers are aged between 24 and 45. 

“Today's housing finance data reveals that while Australians are pouring money into the property market, a very low proportion of these funds are going to first home buyers, less than 15%, and that proportion is now at its lowest level since June 2004, and down from as high as 30% in March 2009,” Amanda Watt, head of new banking business said. 

The housing finance data reveals the number of first home buyer home loan commitments as a percentage of total owner occupied housing finance commitments dropped to 14.7% in March 2015, from 15.1% in February 2015. 

Meanwhile, the average home loan size for first home buyers rose $5,200 to $326,300. The average loan size for all owner occupied housing commitments rose $5,400 to $342,500 for the same period.

Of the total $1.38 trillion home loan market, $904.6 billion related to owner occupiers and another $479.1 billion went to investors. The value of new home loans taken for investment housing jumped 6.4% in March, compared to a 1.6% rise in value for owner occupier housing loans.