First-home buyers defy overall slowdown in home loan take-up

More first-home buyers have gotten their home loans in August, despite the overall slowdown in the number of housing loans over the month.

According to the Australian Bureau of Statistics (ABS), the first-home buyer segment reported a 7% monthly growth in housing loan value to $4.35bn and a 10.4% monthly gain in loan volume.

This was the highest monthly increase in first-home buyer loans since August 2020. However, the volume of first-home buyer loans remained well below the January 2021 high.

The increase in first-home buyer loans was seen across almost all states and territories, particularly in Western Australia, Queensland, and Victoria.

This is surprising, given that the overall housing loan commitments from the owner-occupier segment declined in terms of value (down 2.7% to $18.5bn) and volume over the month.

The biggest declines were in the value and volume of loans for the purchase of new homes, which went down 11.3%.

ABS head of finance and wealth Katherine Keenan said the total lending for housing, which already includes the investor segment, fell 3.4% in August, extending the 8.5% decline in July.

“Although lending continued to fall from the high levels of June 2022, the value of loan commitments in August remained elevated compared to pre-pandemic levels — owner occupier loans in August were 36% higher than February 2020, while investor loans were 70% higher,” she said.

Ms Keenan said there is anecdotal feedback that the increase in first-home buyer segment was due to the 2022-2023 First Home Guarantee.

Housing Industry Association economist Tom Devitt said the RBA’s tightening cycle influenced the overall decline in housing loans.

“The decline in August brings the value of housing loans to its lowest level in almost two years, down by 15.4% on three months earlier,” said Mr Devitt.

“The number of loans for the construction or purchase of new homes also declined by 4.5% in August, to its lowest level since the March 2020 – the first month of the pandemic in Australia.”

Mr Devitt said the downtrend in construction loans, if sustained, could mean that the pandemic building boom has already ended.

“There is still a significant volume of work under construction that is driving economic activity across the economy and keeping the unemployment rate at exceptionally low levels — when this pool of work is completed, the full impact of this rate rising cycle will emerge,” he said.

“These treacherous lags that characterise this housing cycle could result in the RBA weighing too heavily on household finances and jeopardising the housing industry’s future soft landing.”

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