INDUSTRY NEWSNationalReal Estate News

First-home buyers surge, defying rising costs and rates

First-home buyers are fighting back against rising interest rates, the increased cost of borrowing and the soaring cost of living, leading the charge for new home loans.

According to the latest Australian Bureau of Statistics (ABS) Lending Indicators, in November 2023, the number of owner-occupier first-home buyer loan commitments rose 3.5 per cent to 10,395.

This comes after a 7.6 per cent rise in October and is 20.3 per cent higher compared to a year ago.

The value of loans to first-time buyers also soared 25.8 per cent annually to reach $5.25 billion, which was up $142.2 million on October and $1.08 billion year-on-year.

The number of home loans to first-home buyers rose the most in the ACT, up 14.2 per cent, followed by Queensland (10.8 per cent), Western Australia (4.7 per cent), South Australia (3.5 per cent) and Victoria (1.2 per cent).

However, Tasmania recorded a fall in the number of home loans to first-time buyers, down 34.1 per cent, followed by NSW (4.8 per cent) and the Northern Territory (1.4 per cent).

Canstar Lending Expert Steve Mickenbecker said first-home buyers were leading the way with new lending commitments.

“Looking at the number of buyers, first-home buyers’ participation represents 37 per cent of all new loans,” he said.

“First-home buyers have in recent years had to weather the impact of rate rises on borrowing power. 

“Canstar’s analysis shows for the average income, a solo borrower has seen their borrowing capacity fall since April 2022 by $137,000 and likewise, a double-income couple’s budget has been depleted by $331,000.”

Mr Mickenbecker said Sydney’s property market was the hardest for first-time buyers to break into.

“Purchase of a first home, especially in Sydney, is still a hefty challenge, but more buyers are breaking through the ground floor,” he noted.

“Participation of 10,395 first-

home buyers is the highest since May 2022 when Reserve Bank cash rate increases started and is above the long-term average, boosted as it is by periods of high government incentives in 2009 and 2021.”

Overall, the value of new owner-occupier loan commitments for dwellings rose 10.1 per cent through the year to November 2023, while the number of these commitments rose 7.3 per cent.

ABS Head of Finance Statistics Mish Tan said the total value of new owner-occupier totalled $17.86 billion in November 2023.

“November saw continued growth in the value and number of new owner-occupier dwelling loan commitments, which rose 0.1 per cent and 1.0 per cent in the month respectively,” she said. 

The value of total new investor loan commitments rose 1.9 per cent in November and was 18 per cent higher compared to a year ago.

“The growth in owner-occupier and investor lending seen through 2023 was driven by the three states with the largest populations,” Dr Tan said.

“For both owner-occupiers and investors, NSW saw the most growth.”

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.