Housing finance commitments grow, first home buyer rates decline

14.10.13The number of first home buyers committing to buying houses is at its lowest level since April 2004, despite the eight interest rate cuts that have occurred since November 2011.

The latest Australian Bureau of Statistics (ABS) release has highlighted that housing finance figures have been growing steadily since the interest rates were cut and housing industry confidence began to increase.

For example, in August the number of owner-occupier finance commitments taken out increased by 0.6 per cent. This follows on from a 1 per cent increase in July and a 1.5 per cent increase in June.

However, first home buyers are beginning to lag behind, with the president of the Real Estate Institute of Australia (REIA) Peter Bushby stating that the proportion of first home buyers taking out owner-occupier housing finance commitments has fallen to 13.7 per cent.

This is far lower than the average proportion figure of 20.1 per cent, which Mr Bushby states needs to be a top priority for the new government.

“In large part, this drop can be attributed to State Governments withdrawing previous levels of support for first home owners buying established dwellings and it is established dwellings that 80 per cent of first home buyers prefer,” said Mr Bushby in an October 14 statement.

Mr Bushby also indicated that the value of investment housing commitments had increased by 0.8 per cent in August, leading to over a year’s worth of consecutive monthly increases.

“There are increases in the purchase of established dwellings (up 0.7 per cent in trend terms), the purchase of new dwellings (up 0.3 per cent in trend terms) and the number of commitments for the construction of new dwellings (up 0.7 per cent in trend terms),” said Mr Bushby.

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