First home buyers re-enter with a bang | Investors still market shy

Well, it looks like the stamp duty concessions in NSW have made a difference to first home buyers, particularly in Sydney. The Australian Bureau of Statistics (ABS) have released the housing finance figures for August, which show a consistent increase in the percentage of all dwellings financed for first home buyers.

Number of dwellings financed by First Home Buyers

First home buyers up 2.3% this FY

ABS June 2017 figures showed 14.9% of dwellings financed were by first home buyers and after the announcement of the stamp duty concessions, that figure rose to 16.6% for July and 17.2% for August.

Whilst these figures are national, the first home buyer market has been driven particularly from Sydney and Melbourne.

Average loan size for First Home Buyers

First home buyer loan size stable

Interestingly, the average loan size hasn’t increased that much since last financial year– many were concerned first home buyers entering the market would drive up prices. The average loan size for first home buyers in June was $317,800 which increased to $321,800 in July, however have dropped off a little in August to $321,400.

Investor buyer activity down

The main reason why the average loan size and property prices haven’t increased dramatically, is because the investor market has taken the hit. Figures release by the ABS show investor purchases are down in July and August from the peaks of June.

May and June saw an average of 11,738 investment property purchases by individuals. June figures dropped to 9,802 and recovered slightly in August with 10,676 purchases by investors. Construction of dwellings for the purpose of rent or resale by investors dropped to 957 in July from a 12-month high of 1,651.

Number of dwellings on fixed rate loans

Fixed rate loans proving popular

Not surprisingly, more buyers are looking to fix their interest rates for two or more years. 19% of all dwellings financed are on fixed rate loans for 2 years or longer, which is reflective of the lower rates available on fixed interest terms rather than variable.

First home buyer activity set to continue

Being Sydney mortgage brokers, we see market changes before the property purchase phase. Buyers looking to purchase in the next few months, generally speaking, seek finance pre-approval before hitting the property market. We have experienced an increased volume of first home buyer clients who have or are preparing to buy.

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Investors will return to the market soon

One of the issues investors are facing is the tighter lending restrictions and higher interest rates for investment purchases. However, as Sydney mortgage brokers, we are given early insights into new promotions and with one of the big 4 banks are preparing to discount investment property interest only interest rates.

New rates are set to become available later this month year and we’ll see investors return to the market as the finance costs start to decrease.

As Sydney property prices stabilise, investors will also return to the market to take advantage of the stability and potential bargains.  

Speak to a Sydney mortgage broker

Before buying in a changing property market, it pays to secure finance pre-approval before you go shopping. We’ll provide you with your borrowing capacity, product comparisons and property reports so you’ll know exactly where you stand financially before you buy. 

To learn more about how Mint Equity can help, contact us on 02 4340 4847.