Australian first home buyers are making a comeback

Photo by Patrick Riviere/Getty Images

Australian home loan lending fell in July, led by a sharp drop in investor loans.

However, as investor activity continues to cool, there’s renewed evidence that first home buyers are starting to take their place.

According to the Australian Bureau of Statistics (ABS), housing finance fell by 0.9% to $33.027 billion in July in seasonally adjusted terms, led by a steep decline in investor lending which slumped 3.9% to $12.063 billion, the lowest level since August 2016.

From a year earlier, the value of investor lending fell 0.1%, the first decline since August 2016. Only eight months ago it had been growing at 26.5% year-on-year.

That’s another clear sign that APRA’s attempts to curtail investor activity in the housing market is working.

However, while investor lending has gone into reverse, that’s largely been offset by a jump in owner-occupier lending over the same period.

According to the ABS, lending to this category rose by 0.9% to $20.964 billion, leaving it up 5.8% on the levels of a year earlier.

Excluding refinancing of existing facilities, new owner-occupier finance jumped 2.2% to $15.16 billion, the highest level on record.

From a year earlier, new owner-occupier finance increased by 16.9%, the fastest increase since November 2015.

Refinancing of existing owner-occupier facilities fell 3.9% to $5.8 billion, a four-month low. Over the year, the value of refinancing slid 15.2%.

Total housing loans from a year earlier grew by 3.6%, up from 3.2% in June but well below the 10.8% level seen in the year to January this year.

On that metric lending demand is weakening, fitting with other housing indicators such as auction clearance rates and price growth.

In terms of actual loans, they increased by 2.9% to 56,464 in seasonally adjusted terms, well above the 1% lift that had been expected by economists.

Within that figure, owner-occupier loans to buy an established dwelling rose by 2.9% to 46,939, explaining most of the lift in the headline figure.

Loans to construct a new dwelling jumped by 3.1% to 6,448, while those to purchase a new dwelling rose by a smaller 1.9% to 3,076. Despite the increase in the number of loans issued, the value of construction lending fell 3.7% following a large 10.1% increase in June.

Even with that decline, it still rose 11.1% year-on-year.

Helping to explain the jump in the number of owner-occupier loans issued, the proportion going to first-time buyers jumped to 16.6% from 14.9% in June in original terms, coinciding with the introduction of stamp duty concessions in New South Wales and Victoria.

It now sits at the highest level since July 2013.

In New South Wales, loans to first-time buyers jumped to 1,950, the highest level since October 2012. At 2,619, the number to Victorian buyers was the largest since July 2013.

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