First home buying has plunged to a four year low, making up only 9.5% of all mortgages processed in August.
According to the AFG
Mortgage Index, of the total $3.9 billion of home loans processed by AFG
in August, only $324 million were for first home buyers. This contrasts sharply with the $1.5 billion arranged for investors.
, general manager sales and operations at AFG
said this is well below the long term average and could be a sign of underlying socio-economic problems.
“The long term average for first home buyer loans is around 12% - 15% of the total. We saw overnight slumps from those levels when NSW and QLD withdrew first home buyer grants two years ago.
“Since then, property prices in Sydney in particular, have been steadily increasing. This represents a double-whammy for first home buyers. It also has important socio-economic implications when, even with interest rates at historic lows, people can’t afford to get on the property ladder.”
The Index also reveals that the rate of mortgage growth has halted. The August total of $3.9 billion was only 9.6% more than the total amount of home loans processed in August last year. Figures in the preceding months were around 20% higher than the corresponding months in 2013.
Hewitt said it remains to be seen if this slow-down in growth reflects seasonal factors during the last month of winter, or longer term economic factors, such as the impact of the lack of first home buyers on the total market, concerns about unemployment and global instability.