Fear affordability will bypass first home buyers

The ABS has just released the Lending to Households and Businesses data for January 2022 that provides statistics on housing finance commitments, and it’s not good news for first home buyers.

The data reveals that the value of loans to first home buyers fell by 5.0 per cent in the first month of 2022, with the last three months being 14.8 per cent down on a year earlier.

HIA economist Tom Devitt says first home buyers remain more active in the market now than before the pandemic, despite the reduction in the value of lending in recent months.

“First home buyers are very sensitive to changes in market confidence, tightening of finance and declining affordability,” Mr Devitt said.

“Owner occupiers (excluding first home buyers) and investors, on the other hand, both reached new record highs in January in terms of the value of loans.

“The activity of owner occupiers has kept investors to only a third of the market, compared to over 40 per cent back in 2015.”

Lending for renovations has also maintained record high levels with the data revealing that the value of these loans in the last eight month were double that of the equivalent period a year earlier.

Research carried out by Mortgage Choice also shows that Australians are less confident than ever that they can get onto the property ladder.

The data, which was collated by CoreData in conjunction with Mortgage Choice’s new owners REA Group, found that 70 per cent of survey respondents were pessimistic of their chances of getting onto the housing market, or of their chances of getting a home that they like and can afford.

The biggest hurdle is seen to be the price of housing, which has skyrocketed in the last year, with rises of over 40 per cent in some areas.

This was followed by the inability of prospective buyers to find a place that suited their budget in the place where they lived and worked.

The third biggest concern was saving for a deposit, with 56 per cent of respondents concerned about their ability to save for a place as rising prices moved the goalposts further and further away.