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First home buyers surge to decade high

First home buyers are back and ready to buy, with the latest Australian Bureau of Statistics figures indicating new loans to first time buyers have hit their highest level since 2009 in seasonally adjusted terms.

Releasing their figures on Tuesday, the ABS said the value of new loan commitments to first home buyers rose 6.2 in December 2019 following subdued first home buyer activity over the three months prior.

December’s rise was the second strongest of 2019 with owner occupier first home buyer commitments up 21.3 per cent on December 2018.

The first home buyer surge came amidst a general increase in new loan commitments of 4.4 per cent for the month.

 “Strong growth in the value of new loan commitments for housing during the second half of 2019 has seen the series increase 20.7 per cent from the most recent low point in May 2019,” ABS Chief Economist, Bruce Hockman, said.

“New loan commitments for owner occupier housing was the predominant driver of this growth, up 22.8 per cent since May 2019.

“The value of new loan commitments for investor housing, while tracking upward over the past six months, remained down on the March 2017 peak.”

Value of new loans % change Nov 2019 – Dec 2019 % change Dec 2018 – Dec 2019 Highest since
Owner occupiers 5.05% 17.92% May-18
Investors 2.83% 4.90% Oct-18
Total housing 4.43% 14.00% Jul-18

Notes: Seasonally adjusted figures. Figures exclude refinancing.
Source: ABS lending to households and businesses statistics for December 2019, released 11 February 2020.

Number of new loans % change Nov 2019 – Dec 2019 % change Dec 2018 – Dec 2019 Highest since
First home buyers 6.23% 21.33% Dec-09
Refinancers 6.41% 3.61% Sep-19

Notes: Based on the number of new loans to owner occupiers using seasonally adjusted figures.
Source: ABS lending to households and businesses statistics for December 2019, released 11 February 2020.

Commenting on the first home buyer statistics, research director Sally Tindall noted the rise in first home buyer loan commitments came before the January introduction of the Federal Government’s First Home Loan Deposit Scheme.

“First home buyers are flocking back to a market that is quickly heating up again,” Ms Tindall said.

“Initial numbers show the new First Home Loan Deposit Scheme has generated huge interest, adding more competition at already packed open homes.

“The last time we saw this level of first home buyer activity was back in December 2009 when the then government’s First Home Owner Boost was wrapping up.

“If property prices continue to surge, the RBA will be hesitant to cut rates further,” she predicted.

Master Builders Chief Economist Shane Garrett said the first home buyer gains were likely to continue.

“The good news is that first home buyer activity has stepped up even further since the start of this year,” Mr Garrett said.

“The new First Home Loan Deposit Scheme is already a big success and the official data will show more big gains for First Home Buyer once they are released.”

During December 2019, the first home buyer share of the owner occupier market was highest in Western Australia (43.2 per cent) followed by Victoria (40.9 per cent), the Northern Territory (38.4 per cent) and the ACT (32.6 per cent).

The first home buyer market share was lowest in South Australia (25.7 percent), followed by Tasmania (27.6 per cent) and New South Wales (30.5 per cent). In Queensland, first home buyers account for 31.4 per cent of the market.

“Apart from first home buyers, today’s figures show that other areas of the housing market are also recovering well,” Mr Garrett said.

“Housing investor loans expanded for the third consecutive month and hit a 14-month high during December.

“There is a great opportunity for people to buy or build their first home at the moment.

“Apart from the assistance offered by the new First Home Loan Deposit Scheme, interest rates are at their lowest in many decades and house prices have stabilised after dropping back from the highs reached in recent years.”

Meanwhile, the REIA noted the figures for December 2019 showed the value of owner-occupied finance commitments, excluding refinancing, increased by 5.1 per cent for the month and 17.9 per cent for the past year.

“The value increased in all states and territories except Tasmania,” President of the REIA, Adrian Kelly, said.

“The value of investment housing commitments, excluding refinancing, increased by 2.8 per cent in December and is the third consecutive month of increases contributing to an increase of 4.9 per cent for the year.”

“The proportion of first home buyers, as part of the total owner-occupied housing finance commitments, excluding refinancing, was 30.2 per cent.

“With the introduction of the First Home Loan Deposit Scheme in January 2020 we can expect a pick-up in the January figures as well.

“The finance commitments for December reflect a continuing interest and boost in confidence in all buyer segments of the real estate market at the close of 2019,” Mr Kelly said.

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