ABS has released the housing finance figures for June 2018 and while they show housing finance numbers are continuing to fall for the ninth consecutive month, first home buyer participation is at a six year high.

The figures show the number of owner-occupied finance commitments have decreased by 0.5 per cent, and if refinancing is excluded it is a decrease of 0.2 per cent.

Malcolm Gunning, President of the REIA said Tasmania and Adelaide have been the outperformers but as a whole people have lost confidence in the market.

“When the market in the eastern states is declining a lot of people stop and take stock,” said Mr Gunning.

“The downsizers which are owner occupiers have gone ‘I’ve lost money.’”

“When you talk to a vendor now and you say the price might be further down than it was 18 months ago they look at you with horror and say they didn’t think it would affect them.”

Mr Gunning told WILLIAMS MEDIA in the past six months both sellers and buyers have been coming to terms with the current market position, and the decline in prices hasn’t finished yet so there is still uncertainty.

“When you get insecurity people pull back. The fear of missing out has disappeared completely.”

“There is no urgency in the market. If you are selling now there is clearly a purpose.”

“It's not profiteering necessarily, it’s needing to get into a smaller house, relocating, etc.”

Related reading: Market rationalisation underway, says REIA

The REIA said decreases were recorded in all states and territories except Tasmania and Queensland, where lending increased by just 0.1 per cent.

The Australian Capital Territory had the largest decrease of 1.8 per cent.

“The ACT is a small market. You have to be cautious to a certain extent with the percentage.”

“It is affected by NSW more so than any other state. There is no underlying reason for this percentage except that it is an inclusive market which is in line with the rest of NSW.”

The REIA said the value of investment housing commitments decreased by 1.8 per cent in June, and the dollar amount approved for the purchase of dwellings by individuals for rent or resale is at the lowest level since July 2013.

“The number of established dwellings purchase commitments decreased by 0.4 per cent while the purchase of new dwellings decreased by 1.1 per cent and new dwelling construction fell by 0.5 per cent.”

“Whilst the proportion of first home buyers, as part of the total owner-occupied housing finance commitments, increased in June to 18.1 per cent, the number of loans to first home buyers decreased by 8.3 per cent.”

Mr Gunning said he is about to meet with the Deputy Treasurer and will be saying be mindful, as you are putting pressure on the banks and the market is falling away.

He said the comments by the Government and Treasury that they are in line with forecasting is ridiculous.

“I think the fall in prices have been quicker than they expected because they didn’t quite realise the effects of the APRA regulation and foreign investment taxes.”

“They also didn't forecast the level of correctness, and misjudged public reaction.”

“The fall has been quick in the last eight months. It just shows you how in touch the property market is and how sensitive it is to government regulation.”

Related reading: First-home buyers concession a 'boon' in regional Melbourne

While the ABS housing finance figures for June 2018 are negative for housing finance numbers, they also show first home buyer share of owner occupier housing loans is at its highest since late 2012.

The HIA said the figures indicate first home buyers accounted for 18.1 per cent of owner occupier home loans during the month.

Shane Garrett, senior economist at HIA said over the past 12 months, the volume of first home buyer owner-occupier loans has increased by 11.4 per cent.

“There are a few reasons behind this welcome trend. Several state governments, including NSW and Victoria, have enhanced their incentives giving the first home buyer segment a new lease of life,” said Mr Garrett.

“In recent years, record numbers of newly built apartments have also come on stream. In terms of design and price point, many of these are particularly suited to first home buyers and have made the purchase of their first home possible.

“On balance, the slowdown in dwelling price growth over the past year and ongoing low interest rates have also been favourable for those seeking to access the market for the first time.”

Mr Garrett said in contrast, the value of housing investor loans hit a five-year low during June and has declined by 22.4 per cent since its peak at the beginning of last year.

“Investment participation in the housing market plays a key role in delivering new housing supply and is vital to the healthy functioning of rental markets right around Australia.

“Recent policy and regulatory changes have made it more difficult for investors to participate in the housing market. With our population hitting 25 million, any obstacles to housing supply must be avoided so that the industry can meet our future housing needs,” concluded Mr Garrett.

View the ABS housing finance figures for June 2018. 

Related reading:

Advice for first home buyers after new research shows most are clueless about buying property: ME Bank

Housing finance numbers confirm market feedback, says REIA

Advice for first-home buyers