Over the past year there has been a surge in first home buyer activity, in fact first home buyers have been one of the only sources of growth in housing related activity, but are they now fading from the market?
First home buyers have become more active in the housing market over the past year.
There has been a number of reasons for this, dwelling values have been falling which has improved affordability lessened the deposit hurdle, other segments of the market have been less active (less competition) and attractive incentives have been offered to first home buyers in certain states.
The latest data on housing finance from the Australian Bureau of Statistics for December 2018 shows that perhaps that trend is reversing. Note that all the data is seasonally adjusted so the slowdown isn’t likely to be related to seasonality.
In December 2018, there were 8,476 finance commitments by owner-occupier first home buyers which was the fewest monthly commitments since June 2017.
Commitments were also -9.6% lower over the month and down -12.6% year-on-year. Although the number of commitments was lower, as a share of all owner-occupier finance commitments (excluding refinances) the share of first home buyers shifted only slightly from 26.8% the previous month to 26.4% in December 2018.
The minimal change in share is reflective of the overall weakening demand for mortgages.
New South Wales
Across the state, there were 2,232 first home buyer commitments to owner-occupiers in December 2018, which was the fewest since July 2017.
The number of commitments was -5.2% lower over the month and -3.0% lower year-on-year.
In terms of the share of total owner- occupier finance commitments, first home buyers were 24.0% of the NSW market (excluding refinance) which was up from 23.6% over the previous month.
However, overall owner-occupier mortgage demand (excluding refinances) has fallen by a larger -6.1% over the month compared to the -5.2% fall across the first home buyer segment.
Victoria
The 2,604 first home buyer finance commitments in December 2018 were the fewest since June 2017.
First home buyer commitments were -7.7% lower over the month and -14.8% lower year-on-year however, overall owner occupier commitments excluding refinances recorded a larger monthly fall (-10.4%).
As a result, the share of owner-occupier housing finance commitments compared to total commitments (excluding refinances) actually rose over the month to 29.0%, its highest share since July 2013.
Given this, the share is rising however; it is rising on falling volumes for both first home buyers and overall owner-occupiers.
Queensland
Both the number of first home buyer finance commitments and the share of first home buyers compared to new lending fell in December.
Over the month, there were 1,586 owner-occupier first home buyer commitments, which was -11.1% lower over the month and -23.2% lower year-on-year.
It was also the fewest first home buyer commitments since October 2015.
Looking at first home buyers as a share of total new owner-occupier lending, first home buyers represented 24.3% of lending, their lowest overall share since February 2017.
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