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First Home Buyers Need More Than Interest Rate Cuts

12 Aug 2013 Christies Beach 1 Comment

The Real Estate Institute of Australia (REIA) says the latest housing finance figures released by the Australian Bureau of Statistics (ABS) show that whilst total lending for housing is growing in response to interest rate cuts and the positive housing outlook, first home buyers are not responding.

Housing finance figures for June 2013 show, in trend terms, that the number of owner-occupied finance commitments rose by 1.9 per cent – following increases of 2.3 per cent in April and 2.2 per cent in May.

If refinancing is excluded, the increase, in trend terms for June, is 1.8 per cent.

REIA President, Peter Bushby says, “Increases were recorded in all states with the largest increases in Queensland and South Australia, up 2.3 per cent and 2.1 per cent respectively, in trend terms.”

“There are increases in the purchase of established dwellings (up 2.1 per cent in trend terms), the purchase of new dwellings (up 1.8 per cent in trend terms) and the number of commitments for the construction of new dwellings (up 0.9 per cent in trend terms),” Mr Bushby continued.

“The proportion of first home buyers in the number of owner-occupied housing finance commitments rose slightly to 15.1 per cent compared to the May figure of 14.6 per cent. The figure remains persistently low compared to the long-run average proportion of 20.1 per cent despite seven interest rate cuts since November 2011.”

“In large part, this drop can be attributed to State Governments, except Western Australia, withdrawing previous levels of support for first home owners buying established dwellings and it’s established dwellings that 80 per cent of first home buyers prefer.”

The value of investment housing commitments rose by 0.9 per cent, in trend terms, in May resulting in the twelfth consecutive monthly increase.

“With the proportion of first home buyers remaining consistently below the long term average, this needs to be a high priority issue for both major parties as we approach the federal election,” concluded Mr Bushby.

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