Yesterday’s Housing Finance data printed unexpectedly strong with a rise of 4.4% month on month and 12.6% year on year.
Not the heady days of earlier this century, but a pretty solid return to growth and the 5.5% growth in new loans (ex-refinancing) was another indication for the RBA that record low interest rates are working.
But while home owners are benefiting from rising prices, it seems that First Home Buyers (FHB) are either being priced out of the market or exiting of their own accord.
Today’s chart of the day shows the fall in the percentage of FHB since the peak just before the GFC of more than 30% of all new loans to around 12.5% presently. It’s the lowest percentage since 2000.
The RBA won’t be unhappy with this because it suggests that while prices are rising, leverage in the housing stock is not increasing, as the RBA itself showed in the Financial Stability Report.
But the question is are First Home Buyers are taking themselves out of the market, or are they being taken out by the higher prices?