First home buyer numbers bolt

Pete WargentOctober 19, 20170 min read
Since the introduction of new incentives, the number of dwellings financed by first homebuyers bolted to the highest level in 92 months in August 2017, so households are now being formed apace, especially in the two most populous states. 


There's much, much more to household formation than just this, though.
Recall I showed from the 2016 Census figures that Australia's migration programme has led to a demographic tsunami, being millions of 25 to 32 year-olds in Australia, about to swamp the housing markets, heavily focused on Sydney and Melbourne. 
Separate figures reporting the characteristics of recent migrants showed that it's overwhelmingly now the capital cities that are about to be swamped, because new migrants flock to the capital cities, and end up staying there. 
Many first-timers are electing to rent where they live, and are instead buying investment properties as their first step onto the ladder, so the real number of first-time buyers is tracking at close to the long run average. Plus there's the trend towards co-ownership, as recently reported
The 'bank of Mum & Dad'
Perhaps as significantly, there are the parents buying homes for their kids, which is new household formation not reported in the first homebuyer finance numbers. 
We are now seeing this going on practically all the time at auctions in Sydney and Brisbane - to be blunt, it pushes up prices - and evidently it's a big thing down in Melbourne and Geelong too. 



Cate Bakos of Cate Bakos Property in Melbourne notes that it's not only the first homebuyer sector that's being impacted by inherited money:

"Parents are impacting competition levels significantly. Firstly in the first homebuyer concession range - which is already screaming along with heightened borrowing capacity - and secondly the upgrader stakes. We are seeing and hearing of parents paying it forward with inheritance money."

Affordability has been a drag on household formation to some extent since the financial crisis.

However, this is projected to be more than offset by an ageing population - empty-nesters and downsizers - more divorces, more separations, widowhood, and a nascent yet growing trend towards lone-person households living in apartments. And that's before we mention all the empty dwellings.

Over the longer term, the ABS forecasts that the number of households will increase by well over 50 per cent to 12.7 million over the 25 years to 2036.

Pete Wargent

Pete Wargent is the co-founder of, offering affordable homebuying assistance to all Australians, and a best-selling author and blogger.
First Home Buyers
Pete Wargent
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