First home buyers prompt pressure on listings

First home buyer loans peaked at 16,260 in January 2021, which is almost double the monthly average.
First home buyers prompt pressure on listings
Jonathan ChancellorAugust 16, 2021
First home buyer purchasing has contributed to the current low supply and high demand dynamic, according to CoreLogic. "First home buyer activity creates additional housing demand without adding new advertised stock to the market," reseacher Eliza Owen said. First home buyer loans recently peaked at 16,260 in January 2021, which is almost double the series average of monthly first home buyer loans activity. "First home buyer purchases would go a long way in explaining the current supply and demand dynamic. "This is because owner occupier purchasers who already own property would presumably list their existing home around the time they are purchasing a new one." Activity was distorted by incentives for first home buyers in 2020 that saw the introduction of multiple first home buyer incentives, from the first home loan deposit scheme before the pandemic, to various state-based grants and concessions, along with incentives for the purchase/construction of new or off the plan property. Though first home buyer loan commitments have trended lower since January, they remained 58.8% above the series average through June. Owen noted in the same way that first home buyer purchases increase demand without adding to supply, investor purchasing activity has also trended higher since mid-2020. Unlike first home buyer activity, investor purchases are not slowing down, she noted. Through June, there were 18,625 secured home loans for investor property purchases, which is a 74.8% increase on commitments in the same month of 2020. Increased buyer demand has stemmed from continuously falling mortgage rates, the report advised. Mortgage rates are one of the most important determinants of housing demand, and in the current climate, where GDP is once again expected to decline, the RBA will likely facilitate a low rate environment for longer, Owen said.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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