What the rise of first home buyers means for you

The number of first home buyers has finally began to increase thanks to state and territory incentives such as grants and tax concessions, according to data from CoreLogic.

The Australian Bureau of Statistics (ABS) Housing Finance figures for February 2018 showed that while owner-occupied loans were on the rise compared to investor loans, the overall number of housing finance commitments were falling, including first home buyers.

However, CoreLogic data highlighted that although the volume of loans was down on levels in late 2017, it was “33.1 per cent higher than the previous February” specifically for first home buyers.

Nationwide, first home buyers also accounted for 17.9 per cent of all owner-occupier commitments, an increase of 4.6 percentage points from the previous year (13.3 per cent).

Source: CoreLogic.com.au

NSW first home buyers

• The number of first home buyers has reached 15.1 per cent of owner-occupier finance commitments in February 2018, rising 7.6 percentage points from February last year.
• This is the greatest share of owner-occupied loans since October 2012.

• This increase has been linked to stamp duty concessions becoming available for first home buyers from 1 July 2017.
• Since these changes were implemented, there have been 18,400 commitments in the 8 month period compared to 10,857 over the previous 8 months.

First home buyer housing finance commitments in NSW:

VIC first home buyers

• The number of first home buyers in VIC account for 18.3 per cent of owner-occupier finance commitments in February 2018, compared to 13.9 per cent from the last year.
• This increase has also been linked to stamp duty exemptions becoming available for first home buyers from 1 July 2017.

• Since these changes were implemented, there have been 23,996 first home buyer commitments in the 8 month period compared to 17,522 over the previous 8 months.

QLD first home buyers

• The number of first home buyers in QLD account for 19.3 per cent of owner-occupier finance commitments in February 2018, compared to 17.6 per cent a year earlier.

• Throughout February 2018, there were 1,839 first home buyer housing finance commitments, only 3.8 per cent higher from a year ago.

SA first home buyers

• CoreLogic data highlighted that despite housing values in Adelaide being the lowest of any mainland capital city, “SA has the lowest share of first home buyer activity of any state or territory with 13 per cent of owner-occupier commitments going to first home buyers”
• This was an increase of 2.5 percentage points from February 2018 (10.5 per cent).
• Throughout February 2018, there were 443 first home buyer housing finance commitments, 17.8 per cent higher from February 2017.

WA first home buyers

• The number of first home buyers in WA account for 25 per cent of owner-occupier finance commitments in February 2018, compared to 22.2 per cent a year earlier.

• Throughout February 2018, there were 1,185 first home buyer housing finance commitments, falling 0.1 per cent from the year before.

TAS first home buyers

• The number of first home buyers in TAS account for 13.9 per cent of owner-occupier finance commitments in February 2018, compared to 13.8 per cent a year earlier.

• Throughout February 2018, there were 137 first home buyer housing finance commitments, 2.2 per cent higher from a year ago.

It is believed that younger people are moving to Tasmania to purchase a home due to the lower housing prices compared to the mainland. For example, based on Domain State of the Market Report, the median house price for Hobart is $409,592, more than half of the median house price for Sydney ($1,167,516).

CoreLogic Head Researcher, Cameron Kusher, noted that “although the number of first home buyers rose over the year, they remain very low which suggests, at least at this stage, first home buyers in Tasmania are not particularly active”.

NT first home buyers

• The number of first home buyers in NT account for 19.4 per cent of owner-occupier finance commitments in February 2018, compared to 14.7 per cent a year earlier.

• Throughout February 2018, there were 52 first home buyer housing finance commitments, an increase of 26.8 per cent from the previous year.

ACT first home buyers

• The number of first home buyers in ACT account for 25.6 per cent of owner-occupier finance commitments in February 2018, the highest share since October 2009.

• Throughout February 2018, there were 261 first home buyer housing finance commitments, an increase of 177.7 per cent from the previous year.

What does this mean for aspiring first home buyers?

CoreLogic Head Researcher, Cameron Kusher, noted that this data highlights the “sensitivities of this important market segment to both affordability constraints as well as market incentives such as first home buyer grants and stamp duty concessions”.

“Despite broadly slowing conditions in Sydney and Melbourne, it’s clear from CoreLogic indices that the more affordable end of the housing markets in these cities are still seeing values rise, at least in annual terms – a likely demonstration of stronger demand from first home buyers. 

“In other cities where affordability constraints are less severe, in the absence of any changes to first home buyer incentives, first time buyers generally remain more active relative to Sydney and Melbourne.

“With demand from the investment segment expected to continue to be weaker than it has over recent years this may afford more opportunities for first home buyers to enter the market,” said Mr Kusher.

It is also important to keep in mind that for those first home buyers looking in Sydney and Melbourne, purchasing property in this post-housing market peak could see you entering into a “negative equity position”.

First home buyers looking outside of Sydney and Melbourne should also consider that those who weren’t able to afford in the two capital cities could soon saturate these more affordable areas.

This in turn will increase competition and affordability as, according to Mr Kusher, “the outflow of people from NSW to other states and territories is continuing to rise which may result in increases in first home buyers elsewhere”.

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