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First Home Buyers market is down.. Could lack of options be to blame?

Earlier this week my former colleague Cameron Kusher from CoreLogic did what he does best – published an article that provided some insightful analysis on new Australian Bureau of Statistics (ABS) lending data, in particular first home buyer (FHB) data.

He asked the question – Are FHB starting to plant themselves on the sideline?  This followed ABS lending data for the month of December 2018 which showed:

  • 8,476 fewer finance commitments by owner-occupier first home buyers in December which was the fewest monthly commitments since June 2017.  
  • Commitments were also 9.6% lower over the month and down 12.6% year-on-year.  
  • The share of first home buyers shifted only slightly from 26.8% the previous month to 26.4% in December 2018.  The minimal change in share is reflective of the overall weakening demand for mortgages across the board.

This weak FHB data, which has been softening for a few months, reflected 18 months to 2 years of strong FHB activity.


Let’s look at both sides of the equation in terms of what may be happening:


FHB may be pulling back because:
  • Credit is difficult to access in a post Royal Commission environment
  • There is a fear house prices have further to fall and there will be more bargains later in the year
  • Election paralysis – housing markets always take a breather in and around election time, having just seen elections in Queensland and Victoria late last year with NSW and a Federal election to be held in the first half of 2019
  • Policy Uncertainty – particularly Labor’s plans with respect to negative gearing and CGT and the consequential flow on effects to the housing market
  • Pull Forward Effect – 2016 and 2017 saw a raft of State Government incentives (stamp duty and first home buyer grant schemes targeted at new builds) that saw a surge in FHB activity in recent times. History has taught us that this always results in FHB of tomorrow being pulled forward into today’s market, resulting in a void after the effects of the surge have dissipated.  
  • Affordability and Accessibility – real and substantive challenges still exist for FHB meeting more stringent lending criterion and saving a deposit – always the biggest obstacle to entering the housing market.


FHB activity should still be strong because:
  • Affordability – has generally improved in most property markets with house price declines over the past 18 months, particularly in Sydney and Melbourne
  • Less Competition – investors and foreign buyers have largely vacated the field, with the former being a real source of competition for FHBs in recent years
  • Low Interest Rates and Full Employment – interest rates remain at or near historic lows and banks have a strong appetite to write owner occupied business. At the same time Australia’s economy remains strong, if not firing on all cylinders, with strong employment growth (albeit low wages growth)

Overall, on balance I feel that First home Buyer is likely to continue to decline throughout 2019 for the reasons described above.

However, for those FHBs who feel confident in their job security, income progression and have a solution for their deposit needs, there is no doubt the current downturn in the market presents some unique opportunities to take advantage of. If you are or know one such FHB and are struggling with the deposit requirements, check out

To leap frog the market and check if you're eligible click the button below for an instant answer.

Reference Article: here



About the author

Craig Mackenzie


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