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Home lending data has revealed a spike in first home buyer activity as new home sales hit 13-month high.
February 2025 treated borrowers to the first Reserve Bank of Australia cash rate decrease since November 2020. Lenders immediately began reducing rates.
According to NAB, between February and April 2025, there was a 16 per cent increase in first home buyer lending and a 32 per cent increase in total applications compared to the same period in 2024.
Victoria took advantage of the reduced rates the most, with activity growing by 28 per cent. Western Australia saw growth of 22 per cent and Queensland 21 per cent.
NAB’s executive for home lending, Denton Pugh, said the increased activity may even keep its momentum through the usually quieter winter months as borrowers look to take advantage of a more accessible market.
“Despite recent rate cuts, borrowing costs remain relatively high, limiting property value increases. Slower price increases benefit first home buyers by reducing the pressure of rapidly rising house prices,” said Pugh.
Coinciding with NAB’s data was a release from HIA which revealed new home sales in May hit 13-month highs. Throughout the month, new home sales climbed 6.9 per cent.
HIA senior economist, Maurice Tapang, said this was a direct result of the lowering of interest rates.
“The monthly increase in new home sales is consistent with demand factors remaining robust, as Australia records low levels of unemployment, strong population growth and rising prices for established homes,” said Tapang.
NSW and Victoria saw a 20-month high and 13-month high, respectively, in new home sales and have finally seen a turnaround after two years of weak sales.
Other states like Western Australia and South Australia witnessed a drop in new home sales in May.
Despite some positive results following the February rate cut, both NAB and HIA agreed that government action is needed to improve conditions.
Tapang said there is still a shortage of housing that needs addressing on a federal level to remove barriers.
“Even with further cuts to the cash rate, and a recovery in market confidence, there remains a shortage of housing in Australia due to the regulatory barriers to increasing supply,” said Tapang.
Pugh added that “there’s no silver bullet when it comes to housing” and “businesses, government and communities” will need to band together to help reduce hurdles.
“Lower rates are helping first home buyers, as are initiatives such as the government’s Home Guarantee Scheme, but housing affordability and supply aren’t problems we can solve quickly,” said Pugh.
This article was first published on REB's sister publication, Broker Daily.
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