Low interest rates are failing to encourage first home buyers into the market with the latest data from the Australian Bureau of Statistics (ABS) revealing numbers continue to fall.
ABS’ latest housing finance data reveals the number of first home buyer commitments fell to 12.5 per cent in September from 13.7 per cent in August. This is the lowest figure since the ABS started collecting data in July 1991.
Between September and August this year, the average loan size for first home buyers rose $4,800 to $290,800.
The Real Estate Institute of Australia (REIA) said despite total lending for housing growing in response to interest rate cuts and more positive housing outlook for much of Australia, first home buyers were now at a record low.
“It is far lower than the long-run average proportion of 20.1 per cent, despite eight interest rate cuts since November 2011,” said REIA president Peter Bushby.
“With the proportion of first home buyers at historic lows and figures indicating no bubble in lending, the Reserve Bank Board should be taking a ‘steady as she goes’ approach in December.”
Loan Market director Mark De Martino said first home buyers were struggling to enter the market but as the prospective pool of buyers grew, it was only a matter of time before first home buyers return.
“First home buyers are competing with cashed-up investors and upgraders who have significant equity in their property. Building a sizable deposit and understanding their borrowing power with pre approval will give them the best chance to compete in this market” he said.
Last week, the Real Estate Institute of New South Wales (REINSW) said incentives for first home buyers needed to be reinstated.
REINSW Young Agents Chapter Chair Eddy Piddington said not enough was being done to support first home buyers who are struggling to save a deposit and competing against investors.
“The NSW Government’s return to surplus … signals it is time to allocate much needed funds to first home buyers for the purchase of existing properties,” Mr Piddington said.
“Restricting first home buyer incentives to new builds has not worked. First home buyers can’t afford to or don’t want to purchase new properties, and as a result many young people now don’t want to buy at all."
While the latest data reveals a fall in first home buyers, major network LJ Hooker has predicted in its white paper that first home buyer numbers wouldl rise by 21 per cent next year.