Lending to first home buyers has grown by 74% in Sydney in the last year, according to a report released this week.
QBE’s Australian Housing Outlook 2018-2021 also looks at property price prediction and expects house prices to grow over the next three years, apart from in Sydney and Melbourne.
The research suggests prices in the two capitals will continue to fall in 2019, by 3.5% in Sydney and 4.2% in Melbourne.
The drop in prices has meant lending to first home buyers is now at its highest level since 2010 and this is expected to continue as prices drop further.
While Sydney saw the highest growth, the number of first home buyers across the whole country grew by almost 30%.
Tighter lending standards for domestic investors and restrictions on international buyers are believed to be the primary drivers.
QBE Lenders’ Mortgage Insurance (LMI) CEO, Phil White, said the surge in first home owner lending proved the Great Australian Dream of home ownership was alive.
He said, “The increase in the volume of first home buyers has been supported by improvements in affordability and first home buyer incentives.
“Record low interest rates in recent years had seen a surge in investor lending, but this year’s report shows investor lending scaling back, which should also provide further room for first home buyers over the next couple of years.
“Lenders’ responses to regulatory restrictions have contributed to the softening of the market. State government incentives have encouraged first home buyers to enter the market after several years of being pushed out by domestic and foreign investors.”
In terms of property prices, Adelaide is expected to see the highest growth compared to any other capital city.
Over the next three years house prices are set to rise in Adelaide by 12.4%, in Brisbane by 11.3%, Canberra by 10.4%, Hobart by 7.9%, Darwin by 6% and Perth 5%.
The outlook for apartment owners shows unit prices are set to fall in Brisbane by 5.1%, Darwin by 4.5%, Sydney by 3.1% and Melbourne by 2.1%. This is due to weaker demand from investors and an increase in supply of apartments.