First home Buyers Taking Advantage of Strong Conditions

Mr Lawless commented that the latest housing finance data provides an interesting insight into the Australian residential housing market with the number of finance commitments for residential housing, which includes all significant bank and non-bank lenders, has risen consistently from month to month since the first interest rate cut back in September. He believes that the increase in the volume of housing loans suggests the combined effect of the Government's stimulus and falling interest rates, together with market conditions that favour the buyer, are having a positive impact on consumer confidence in the residential real estate market.

On a seasonally adjusted basis, the volume of owner occupier loans jumped to 10.3 per cent over the December quarter. The most dramatic jump in percentage terms has been for new housing where the number of loans is up 32 per cent for the December quarter, suggesting the tripling of the First Home Buyers Grant for newly constructed housing is providing a real boost to the industry.

The lift in market activity has almost exclusively been concentrated in the owner occupier segment of the market.

Despite a 2.9 per cent rise over the month of December, the value of investment housing loans actually fell by 3.6 per cent over the December quarter (seasonally adjusted) highlighting that investors are still mostly happy to remain on the property market sidelines.

Mr Lawless said "This is good news for first home buyers, because fewer investors mean less competition. These two segments of the market often compete for the same housing stock due to the low entry price and generally strong rental yields."

"The prime buying conditions, where there is little competition amongst buyers, a lot of stock to choose from, and plenty of time to make a purchase decision, will probably not last much longer. The increase in the First Home Buyers Grant expires at the end of the financial year creating an increasing level of urgency. Although there is wide spread speculation that the grant time frame will be extended, this is not guaranteed," he said.

Mitch Koper National Media & Comms Manager RP Data - "Real Property knowledge you can trust"

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