First-home buyers borrowing more than ever: ABS

First-home buyers are not giving up their dream of home ownership despite rising prices, with data released Friday showing they are borrowing more than ever to secure a home.

Home loan data from the Australian Bureau of Statistics shows first-home buyers took out an average loan of $340,200 in June ? the highest on record and up 10.2 per cent ($31,600) on last year.

Domain Group senior economist Andrew Wilson said the overall 6.8 per cent quarterly jump in first-home buyer commitments could be “an early sign of improvement”.

Even so, first-home buyers as a proportion of all loans were likely to keep falling, he said, due to the “extraordinary growth of investors numbers”.

“It’s going to be a much longer journey for first-home buyers, especially to get into that Sydney market.”

In NSW, first-home buyers borrowed $398,600 on average to secure a property, the most of any state.

In Victoria, first-timers are borrowing $338,300 – a near-record amount.

AMP chief economist Shane Oliver agreed rising prices were concentrated to Sydney and Melbourne, and said those markets affected the national outlook.

“As prices move up, people have to borrow more to buy their first home,” Dr Oliver said.

“But what makes it harder is, in the olden days when we paid less for homes and interest rates were higher, we also had high inflation and wages were going up faster.

“So the burden of the high level of interest rates didn’t last as long, because as wages went up suddenly [the larger] mortgages didn’t seem like such a big number.”

St George chief economist Hans Kunnen said the data showed first-home buyers were still in the game, but said next week’s investor numbers would prove how much competition they still faced from investors.

“Given the changes that APRA and the banks have recently put in place, we might see a little less competition from investors, which may give some hope to first-home buyers,” Mr Kunnen said.

“But I still think demand from investors will remain strong as long as interest rates remain as low as they are.”

The value of financing commitments across all dwellings climbed 2.8 per cent in June, to $32 billion when seasonally adjusted. The value of occupied housing finance rose 5.5 per cent for the quarter to $18.56 billion.

Despite the record amount being borrowed by first-home buyers, economists agreed there was little danger within Australia’s risk adverse lending environment.

SMH / August 7, 2015