FHB's keep distance from property market

FHB's keep distance from property market

13 April 2010 by Staff Reporter 0 comments

Demand for home loans is sagging as first home buyers increasingly vacate the property market.

Data from the Australian Bureau of Statistics (ABS) found the number of mortgages taken out by owner-occupiers slumped for the fifth consecutive month in February, dropping 1.8 per cent, to be down more than 22 per cent on the June 2009 peak.

First home buyers accounted for the majority of the slide, with loans to aspiring house owners down 43 per cent from a year earlier.

Mortgage Choice chief executive officer Michael Russell said the results indicated that the housing market is “far from recovered”.

“In contrary to what many market commentators are indicating, a decline in the total value and number of housing commitments shows the overheating of property prices is more likely to be based on demand outstripping supply and not the result of a recovered housing market,” Mr Russell said.

Housing Industry Association chief economist Dr Harley Dale agreed and said the recent acceleration in home construction to an annual rate of about 16,000 would be difficult to sustain.

Dr Dale said “very weak” housing finance highlighted the risk that the recovery could begin to wane as early as mid-year, exacerbating the housing shortage.

“There is a clear risk that this shortage worsens because the recovery runs out of steam years ahead of when it needs to. Such an outcome would deliver upward pressure on rents and home values,” he said.

According to the ABS, housing finance commitments dropped 2.1 per cent in February, while owner occupied housing commitments fell 3.1 per cent and investment housing commitments dropped 0.4 per cent.

Demand for home loans is sagging as first home buyers increasingly vacate the property market.

Data from the Australian Bureau of Statistics (ABS) found the number of mortgages taken out by owner-occupiers slumped for the fifth consecutive month in February, dropping 1.8 per cent, to be down more than 22 per cent on the June 2009 peak.

First home buyers accounted for the majority of the slide, with loans to aspiring house owners down 43 per cent from a year earlier.

Mortgage Choice chief executive officer Michael Russell said the results indicated that the housing market is “far from recovered”.

“In contrary to what many market commentators are indicating, a decline in the total value and number of housing commitments shows the overheating of property prices is more likely to be based on demand outstripping supply and not the result of a recovered housing market,” Mr Russell said.

Housing Industry Association chief economist Dr Harley Dale agreed and said the recent acceleration in home construction to an annual rate of about 16,000 would be difficult to sustain.

Dr Dale said “very weak” housing finance highlighted the risk that the recovery could begin to wane as early as mid-year, exacerbating the housing shortage.

“There is a clear risk that this shortage worsens because the recovery runs out of steam years ahead of when it needs to. Such an outcome would deliver upward pressure on rents and home values,” he said.

According to the ABS, housing finance commitments dropped 2.1 per cent in February, while owner occupied housing commitments fell 3.1 per cent and investment housing commitments dropped 0.4 per cent.

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
REVEALED: The 10 best agents in Australia for 2017

For the first time ever, the top 10 agents in the REB Top 100 Agents ranking are revealed in this exclusive podcast. ...

View all podcasts

Are dodgy agents being punished enough?

Yes (8.6%)
No (55%)
Only in some states (2.3%)
Not all dodgy agents are being found out (34.1%)

Total votes: 220
The voting for this poll has ended on: April 15, 2017
Do you have an industry update?