The proportion of first home buyers entering the property market has reached its highest level in five years after state and federal government intervention lifted the market out of a near-all-time low a year ago.
The rally has seen the proportion of loans to first home buyers jump to 18 per cent, according to Wednesday’s figures from the Australian Bureau of Statistics, surging from 13 per cent in January last year.
The rise comes as investors increasingly leave the cooling property market, particularly in Sydney where Chinese buyers are losing interest after a string of crackdowns and fears the market has peaked.
NSW still recorded among the strongest gains in the country, with 12,000 loans for owner occupiers commencing at a growth rate four times that of Victoria at 2 per cent.
The last time the proportion of first home buyers was this high was in September 2012, when the median house price in Sydney was $645,000 and $529,000 in Melbourne. Median prices in both cities have nearly doubled since then.
Banks were forced to clamp down on risky lending by the Turnbull government and regulators last year amid fears they were putting economic stability at risk and forcing out young would-be homeowners.
At the same time, the NSW and the Victorian governments encouraged first home owners into the market by offering stamp-duty concessions.
The latest figures show those measures now appear to be working, with analysts tipping a further decline in investor dominance in 2018.
“Our expectation is for the share of investor loans to drift a little lower in 2018 as enhanced macro-prudential measures force domestic banks to decrease their exposure to this group,” said JP Morgan economist Tom Kennedy.
But keeping the supply of homes accessible to first home owners could be more of a challenge in the long term, with the figures also showing a softening in demand for newly constructed dwellings.
According to trend estimates, loans in that sector fell by $18 million in November, or 0.9 per cent, while falls were also recorded in loans for houses for rent or resale, which were down 2.3 per cent.
The seasonally adjusted figures show the total value of investment housing commitments was relatively flat after a 1.5 per cent gain in November.
The figures follow a separate report which showed consumer sentiment rose in January for a second month to the highest in four years, adding to recent signs that households were starting to get over a spending slump following a long period of tighter household budgets.
The ‘good time to buy a dwelling’ index climbed 6.1 per cent to 106.7, the highest reading since September according to the Melbourne Institute and Westpac Bank survey of 1,200 people.
The index was up 7.9 per cent on January last year at 105.1, meaning optimists now outnumbered pessimists in what has been the most positive start to a calendar year since 2010.
Westpac Senior economist Matthew Hassan said sentiment has continued to recover from the weakness seen in the three months to September last year, boosted by a less threatening outlook for interest rates and improving confidence in employment.
“However, the degree to which spending improves still looks likely to be constrained with the survey detail suggesting family finances are still under pressure, limited scope for further reductions in saving to support spending, and high debt levels an ongoing concern for many households,” he said.
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