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First home buyer activity might be coming to an end, report finds

25 February 2019 Tim Neary

Over the past year, there has been a surge in first home buyer activity, accounting for one of the only sources of growth in housing-related activity, the latest CoreLogic report has found.

There are a number of reasons that first home buyers have become more active in the housing market over the past year, the latest CoreLogic Property Pulse has found.

It said that dwelling values have been falling which has improved affordability and lessened the deposit hurdle, other segments of the market have been less active and attractive incentives have been offered to first home buyers in certain states.

But it said that the latest data on housing finance from the Australian Bureau of Statistics for December 2018 shows that the trend might be reversing.


Head of research at CoreLogic Tim Lawless said that in December 2018, there were 8,476 finance commitments by owner-occupier first home buyers, which was the fewest monthly commitments since June 2017.

He said that commitments were also 9.6 per cent lower over the month and down by 12.6 per cent year-on-year. Although the number of commitments was lower, as a share of all owner-occupier finance commitments, the share of first home buyers shifted only slightly from 26.8 per cent the previous month to 26.4 per cent in December 2018.

“The minimal change in share is reflective of the overall weakening demand for mortgages,” Mr Lawless said, adding that since all the data is seasonally adjusted, the slowdown isn’t likely to be related to seasonality.

“To date, the first home buyer segment has been the one source of growing demand across the housing market. Although the weakness has only been apparent for a few months, it will be important to watch going forward.

“With an entrenched downturn in lending to investors and owner-occupier demand falling sharply, if first home buyer activity drops, it could lead to a further leg down in value declines across the market.”

Mr Lawless said that the more opportunities could open up for some first home buyers.

“The more pragmatic potential first home buyers are probably seeing values decline, and despite incentives, they realise that if they remain on the sidelines, the properties they are targeting could be becoming even more obtainable over the coming months.”

First home buyer activity might be coming to an end, report finds
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