First home buyers left out in the cold
Owner occupiers are dominating housing finance.
New figures from the Australian Bureau of Statistics (ABS) show housing finance fell slightly in March, declining by 0.2%. Along with the overall decline in housing finance, lending to first home buyers fell to its lowest level since May 2004. ABS figures show first time buyers accounted for only 14.2% of the market in March, down from 14.6% in February. At the same time, the average loan size for first home buyers rose by $1,600 to $328,700.
The investment market has showed signs of cooling, edging 1.1% lower in March on the back of banks tightening their lending to investors. In spite of this, construction loans to investors surged, Housing Industry Association (HIA) economist Diwa Hopkins said.
“While total home lending edged marginally lower in March, lending to investors in the new housing market jumped by 54.1%. This moderated the effect of declining lending that occurred in each of the other components of housing finance,” Hopkins said.
The surge in investor activity in the new housing market comes on the heels of the Federal Opposition’s announcement that it plans to restrict negative gearing to new housing if elected. REIA president Neville Sanders used the ABS figures to argue against changes to negative gearing, claiming the current tax arrangement kept rents “lower than they would otherwise be”.
“From 2013, when investment in housing started to pick up, we have seen the rate of increase in rents slow down in Australia. The March quarter 2016 increase was 0.1%, the lowest since March 1995. The annual increase in rents to March 2016 has been 0.9%, again the lowest since March 1995,” Sanders said.