First home buyers increasing in numbers

by Miklos Bolza09 Mar 2017
The number of first home buyers has risen by 6.6% throughout December quarter last year, a slight increase of 0.5% from the same time period in 2015.

New statistics from the Real Estate Institute of Australia (REIA) in conjunction with Adelaide Bank show that first home buyers comprise 13.8% of the owner occupier market with more than 23,273 borrowers. Excluding refinancing, this jumps to 20.7%.

“The bad news is that despite this increase in first home buyer numbers, it is still a figure well below the historical average of 18.5% of the owner occupier market since the early 1990’s,” said Damian Percy, general manager of Adelaide Bank.

“Large land releases such as those recently announced in Victoria can be expected to improve opportunities to enter the market.”

Breaking down the number of first home buyers for each state, Victoria came out on top with more than 7,000 FHBs entering the market. NSW came in second with more than 4,200 first home buyers.

As well as this, the average loan size to first home buyers increased to $323, 633 in the December quarter. This indicated an increase of 1.3% throughout the quarter and a decrease of 1.5% year-on-year.

The average loan size increased in NSW, Victoria, Western Australia and the Northern Territory and decreased everywhere else.

The difficulties facing first home buyers specifically as well as the market in general is structural, Percy told Australian Broker.

“Though banks can and do all we can to assist FHB’s with the various tools we have at our disposal, if all we end up doing is to finance house price inflation, we’re simply going along for the ride.”

He suggested that local, state and federal governments do what they can do increase supply, moderate the concentration of demand and remove incentives to speculate.

“The answers here are well known and self-evident, as is the lack of political will.”

While state governments understand the importance of a vibrant FHB market in terms of economics and community, they often struggle with structural issues caused by limiting supply and liquidity through regulations and taxation, Percy said. Instead, they tend to throw money at the demand side of the equation.

“We’re expecting to see a modest uptick in activity as more state governments fall for the temptation of pulling the funding lever via grants and other mechanisms, but, as always, this will likely push prices up and simply exacerbate the problem.”

Related stories:

Victorian stamp duty exemption could push up property prices

Sydney property offered exclusively to FHBs

MP suggests 'no deposit' mortgages for reliable renters