ABS data shows that first home buyers accounted for 29.8 percent of the national owner occupier home loans market as of August 2019, the highest level of property purchase since 2012. There’s also the fact that first home buyers didn’t have to compete as aggressively with investors. The investor activity generally trending down at 43 percent of mortgage demand after peaking in 2015.
The August update shows that investors accounted for only 26% of mortgage demand, well below the average of 34% over the decade. The growing trend is consistent across each state with FHBs being most active in the Northern Territory and Western Australia where this part of the market accounts for 45 percent and 37 percent of owner-occupier mortgage demand, respectively.
These are also the two regions where housing values have fallen the most, providing a substantial improvement to housing affordability. FHBs in Victoria represent 33% of the market; ACT and NSW 28% each; QLD 27%; TAS 24% and SA 22%.
Grounds for the boost are the increase in affordability due to the recent recession in housing, lower interest rates, a relaxation of requirements for borrowing assessment, while some states have provided additional opportunities through compromises and grants for stamp duty. As a result of APRA’s tough stance in 2015, property investor mortgage demand reached the 40% target, there is also less competition from investors.
The First Home Loan Deposit Scheme, which goes live in January next year is likely to be oversubscribed, but we are not expecting this system to make a substantial difference in total first home buyer participation rates given the program is capped at 10,000 buyers, which is equal to less than 10 percent of first home buyer numbers over the past year.