First-home buyers are rushing back to the property market. Here’s how. Picture: iStock.
First-home buyers are rushing back to the property market. Here’s how. Picture: iStock.

How first-home buyers are cracking tough market

First-home buyers have flocked to the property market and signed up a decade-high number of new loans.

New statistics released today by the Australian Bureau of Statistics showed in December the number of first-time buyers increased by 6.2 per cent in seasonally-adjusted terms to a monthly total of 9606 - the highest level since December 2009.

The total value of loans was $3.96 billion and the average loan size was $412,240.

The new loans taken out by first home buyers also climbed by 21.3 per cent in December compared to December 2018.

A recovering housing market, the easing of lending rules and record-low interest rates have been highlighted as the reasons for the sharp incline in first homebuyer activity.

First-home buyers have flocked to the property market and signed up a decade-high number of new loans. Picture: Thinkstock
First-home buyers have flocked to the property market and signed up a decade-high number of new loans. Picture: Thinkstock

 

HSBC chief economist Paul Bloxham said the market was more appealing to owner occupiers than investors at the moment.

"House prices are rising but we still in the major cities are not quite yet at the peaks that we were at back in 2017," he said.

"But it may still be that we get more investor activity somewhere down the track."

He said differential interest rate pricing on loans for owner occupier versus investors had also "driven a wedge" in the market, which could be providing "less encouragement for investors".

Mr Bloxham said the banking regulator, the Australian Prudential and Regulation Authority "loosened the settings" last year in tandem with multiple cash rate cuts and that had also played a part in helping boost buyer activity.

Aussie chief executive officer James Symond said the latest figures showed "young Aussies have a strong appetite for property".

"Australians naturally want to progress towards their home ownership goals and with the current low rates, strong auction clearance rates, and the Federal Government' First Home Loan Deposit Scheme 2020 it's providing new opportunities for first home buyers to capitalise on," he said.

The Federal Government this year rolled out the First Home Loan Deposit Scheme, offering 10,000 spots to eligible applicants to help them get into the property market sooner.

Big banks the Commonwealth Bank and National Australia Bank as well as 25 small lenders are part of the scheme.

It enables borrowers to front up with just a five per cent deposit and the government will act as a guarantor for the remaining 15 per cent.

This means the borrowers can avoid the expensive lenders' mortgage insurance which normally costs thousands of dollars.

Rates are also remaining low - the Reserve Bank of Australia board met last week and kept the cash rate on hold at 0.75 per cent.

Many owner occupier interest rates remain around the three per cent mark with some as low as 2.69 per cent.

sophie.elsworth@news.com.au

@sophieelsworth


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