First-home buyers at lowest share of new home loans in more than eight years: historical data to 1991

Plummeting first-home buyer numbers have raised fresh questions about recently introduced first-home buyer grant schemes on offer in NSW as well as raise issues about current housing affordability. 

The number of loans to first-home buyers in December 2012 fell to 14.9% according to ABS figures, the fourth consecutive month that this segment of the market has declined.

This a 37% decline on figures from a year ago when first-home buyers accounted for more than one in five new home loans (21.1%).

This was the weakest proportion of first-home buyers in the housing market since June 2004 and just two percentage points off the record low of 12.8% in March 2004 for ABS figures going back to July 1991.

The decline suggests that the new first-home owner grants in Queensland and NSW, which provide generous handouts of $15,000 – but only for those who buy or build new homes – have missed the mark and are as claimed by the likes of Ray White chairman Brian White nothing more than a builder or developer incentive.

In addition they suggest housing remains unaffordable or undesirable for most prospective first-home buyers with low mortgage rates and a decline in capital city house prices over the last few years failing to spur this segment of the market in a meaningful way.

The fall was sharpest in NSW, where there was a 3.2% decline as well as a smaller 0.8% drop in Queensland and a 1.9% decline in WA. 

“The state detail was something of a surprise,” notes Westpac, who called the December figures “another weak reading” for first-home buyer activity. 

“We had expected unwinding first-home buyer demand in NSW (from an earlier bring-forward relating to state government changes) to have run its course by December with weakness to instead centre on Victoria where stamp duty concessions coming in from January 1 would have encouraged many FHBs to delay purchases. 

“Instead, the sharp slide in NSW continued (–3.2%) with Victoria posting a slight rise (+0.3% for the month). 

Westpac estimates that approvals in this segment were down another 5.7% in December on a seasonally- adjusted basis.  

First-home buyer numbers peaked in May 2009 following of the doubling of the first-home owners grant to $14,000 for those buying existing homes and trebling it to $21,000 for those buy newly built homes in October 2008. 

First home buyers as percentage of home lending dating back to 1991 (ABS)

Source: ABS

*Record lowest proportion of first-home buyers

**Previous lowest proportion of first homebuyers after December 2012

***Highest proportion of first-home buyers