First home buyers rare as wild lions

by Miklos Bolza08 Dec 2016
With the number of first home buyers pushed down to record lows by increasing loan sizes, the head of one local bank has likened them to an endangered species.
 
“The number of first home buyers for the [September] quarter has dwindled to a figure now equivalent to the number of lions believed to be left in the wild,” said Damian Percy, general manager of Adelaide Bank.
 
Percy pointed to figures from the Real Estate Institute of Australia (REIA) Housing Affordability Report which showed that the number of first home buyers decreased by 6.7% to 21,825 during the September quarter.
 
“First home buyers now make up 13.2% of the owner-occupier market with all states and territories recording decreases in first home buyers over the September quarter 2016, excepting Queensland and the Northern Territory,” Percy said.
 
“This is the lowest figure since the ABS series was commenced in June 1991 and compares to an average of 18.5 per cent over the period”.
 
Also during the September quarter, the proportion of median family income required to meet average loan repayments rose by 0.1 percentage points to 29.5%.
 
“Unfortunately, historically low interest rates were unable to offset the increasing size of mortgages resulting in the rise in the proportion of the median family income required to meet average monthly loan repayments,” said REIA president Neville Sanders.
 
While NSW remained the least affordable state for home buyers in the September quarter, affordability improved in Victoria, South Australia, the Northern Territory and the Australian Capital Territory.
 
Tasmania had the smallest average loan size while the proportion of first home buyers on the owner-occupier market was largest in Western Australia.
 
“The [ABS] has recently revised its housing finance survey with the changes affecting statistics on owner-occupied and investment housing, the number of first home buyers and housing loan outstanding to households,” Sanders said.
 
It was “extremely disappointing” that the revised figures showed fewer first home buyers since 2012 than previously reported, he added.
 
“With the average loan sizes continuing to rise, REIA is concerned that the proportion may fall even further in the coming quarters.”
 
Related stories:
 
NSW beats VIC to top HIA housing scorecard
 
First-home buyers priced out of stamp duty concessions
 
First home buyers pose the biggest risk to banks

COMMENTS

  • by Eve 8/12/2016 5:02:05 PM

    A suggested solution:- What would be the negative impact if let FHB utilize their super funds to form a deposit and purchase a home? After all, buying a property forms part of our wealth creation strategy for "retirement purposes". We make the most of direct equities or managed funds to grow our nest egg, why not allow access to super funds to get in the property market, but only in specific situation, such as FHB. Not everyone has parents to make a gift or be a guarantor. However, everyone needs a roof. If we do not become more flexible with these rising non-deductible loans, we'll end up seeing accumulators renting for life and FHB retirees using their retirement funds to finally buy their first home.

  • by John from SA 9/12/2016 11:23:07 AM

    Good idea Eve - one could argue one's home is required longer than Super!

    Let the Government make home ownership a more even playing field - let FHBers also claim their home loan interest as a tax deduction, just like the subsidised mum and dad and professional "negative geared" investors!

    Also, to offset the above, the Feds (and/or States) should also charge an additional 5% "Purchase Tax" on foreign buyers of Oz residential property.

    As well as existing investors, these foreign buyers are also pushing FHBs out of the market - they should help to subsidise Australian FHBers.