'No surprise' as first-home buyer enquiries down 19% in July: Loan Market
Mortgage broker Loan Market has recorded a six-percentage-point (0r 19%) fall in enquiries from first-home buyers in July compared with June.
This decline may confirm what some market commentators have suggested: that the ending of generous first-home buyer schemes in four states and territories artificially pulled forward demand and could result in a decline in first-home buyer numbers in the months that follow.
Official ABS figures show that first-home buyers accounted for 18.3% of total owner-occupier housing finance commitments in June, the highest level in five months and up from 17.8% in May.
First-home buyers made up 29% of Loan Market enquiries in July – down from 35% in June, a 19% drop.
The drop in first-home buyer inquiries was replaced by interest from upgraders, with Loan Market recording a 13% increase in mortgage inquiries from those looking to move up the property ladder.
Owner-occupier property purchasers or upgraders in July accounted for 50% of Loan Market’s total enquiries nationwide, compared with 44% in June.
Investors accounted for 8% of enquiries, followed by refinancers on 6% and business loan enquiries on 3%.
Victoria, South Australia and the ACT all ended first-home buyer incentive schemes at the end of June, while NSW first-home-buyers must wait until October 1 for a more generous first-home buyers scheme to kick-in.
NSW first-home buyer activity could pick up again from October 1 – but only in new or off-the-plan purchases, with a number of NSW developers trying to encourage more first-home buyers with incentives of their own.
“It’s no surprise that this drop off in first home buyer activity has coincided with a number of incentive schemes for this segment of the market being wound up by some state and territory governments at the end of the 2011-12 financial year,” says Loan Market spokesperson Paul Smith.
“But although we have seen a modest drop off in enquiries from first-time buyers, there has been an increase in people looking to upgrade in the current market.
“This is no doubt a reaction to the RBA lowering official interest rates in May and June this year to bring the cash rate down to 3.5%.”
Despite the ending of the state and territory incentives, Smith says the federal government’s $7,000 first-home buyers’ grant, which has been in place for more than a decade, continues to be offered nationwide.
It ends in NSW on October 1, replaced with the first-home owner grant (new home) scheme – only available to first-home buyers purchasing a new home.
Smith says the Queensland government’s decision to reinstate its transfer duty home concession scheme from July 1 also helped attract more upgraders.