First-time buyers are making a comeback, especially in Melbourne.
New entrants to the property market jumped 36% in June, year-over-year, according to data from aggregator giant Loan Market Group (LMG). The spike in first-home buyers was especially strong in Victoria. Meanwhile, demand from upgraders and investors is cooling.
"This isn’t just a short-term bounce," said Ewen Stafford, executive director and chief executive officer at LMG. "It’s a sign that Australians are adapting to a new lending environment where affordability, confidence and strategy are beginning to find balance again.
"With rate cuts, a rise in real income and pent-up demand, this is a positive sign for the housing market," Stafford said. He noted that more young buyers are stepping into the market, even as overall credit growth faces pressure in an increasingly competitive lending landscape.
June's surge helped lift overall mortgage approvals by 5%, making it the second-strongest month on record for the aggregator. By contrast, upgrader and investor activity – while still a larger portion of total mortgage applications – remained relatively flat or even declined. Owner-occupier upgrader approvals edged up just 1.5% month-over-month (but fell -4.7%, quarter over quarter), while investor approvals grew by just 1.2%, month-over-month, or up 0.7% for the quarter.
First-home buyers now account for 13% of all new mortgage approvals (excluding refinancing), the highest share recorded in LMG’s data series.
Victoria was at the forefront of the first-time homebuyer resurgence, accounting for 39% of all first-home buyer applications by loan value. In the state, first-home buyers made up 18% of total mortgage applications in June, which was well above the national average of 13%. Upgraders made up 55% of applications in Victoria and investors 27%.
In addition, the regions with the highest number of first-time buyers with mortgage applications by dollar value were Melbourne’s eastern, inner and western suburbs, as well as Greater Brisbane, Coastal Sydney and Greater Western Sydney.
"Melbourne’s market is a mixed bag," Cara Julian, founder and mortgage broker at Melbourne-based Brava Finance, told Australian Broker. "Some areas are booming; others are plateauing. And affordability remains a real challenge, especially for single-income households. Throw in stamp duty and tight lending policies, and it’s no wonder buyers feel overwhelmed. But we’re seeing a rise in savvy clients who are willing to think creatively: shared purchases, regional relocations and long-game strategies are becoming more common."
Melbourne’s rise as a hotspot for first-time homebuyers comes amid rising living costs, a national housing crunch, growing reliance on brokers, global instability and continued uncertainty around monetary policy. In addition, soaring property prices have forced many would-be homeowners out of the market all together.
By contrast, areas like Queensland held a 21% share of national first-time buyer activity, with newbie homeowners making up 13% of mortgage applications in the state. New South Wales lagged behind with 18% of first-time buyers, while Western Australia accounted for 12%. South Australia, the ACT, Tasmania and the Northern Territory all accounted for 5% or less of first-time buyers.
"Melbourne provides great value in terms of real estate," said Bernard Desmond, founder and chief executive officer at Melbourne-based brokerage Blank Financial. "I think it's grossly underpriced and the bottom is behind us. Definitely a good investment in my opinion."
