New data from the Australian Bureau of Statistics (ABS) and mortgage broker aggregator AFG show the first home buyer market has shrunk dramatically.
Latest housing finance figures from the ABS show first home buyers only accounted for 15.8 per cent of the market in November 2012, down from 18.7 per cent in October.
Real Estate Institute of Australia (REIA) president Peter Bushby said this was the lowest result since July 2004.
“Of major concern is the drop in first home buyers to the lowest level in eight years,” he said. “This, no doubt, can be attributed to some state governments withdrawing previous levels of support for first home owners buying existing dwellings."
December figures from AFG also indicate the aggregator, which handles around 10 per cent of the country's residential mortgages, experienced a drop-off in first home owner loans.
The average long-term share of home loans arranged for first home buyers collapsed to 2.3 per cent in NSW and 4.5 per cent in Queensland during the last two months of 2012, according to a statement from the company.
The figure is normally up at around 12 to 15 per cent.
Mark Hewitt, general manager of sales and operations at AFG, said the mortgage market was in need of greater competition and increased confidence.
“It’s pretty well established that despite strong employment levels, low interest rates and greater savings, many people simply don’t feel sufficiently confident in our economy to buy their first home, upgrade or invest,” Mr Hewitt said.
“This is particularly the case for first home buyers of established housing and more needs to be done to encourage younger people into buying their first home.”