Data released yesterday has shown that the percentage of first home buyers has risen to the highest level on record.
Since the Australian Bureau of Statistics started collecting data in 1991, first home buyers now make up 28 per cent of all homes financed which is the largest proportion recorded since they first began.
The number of housing loan approvals rose by 0.9 per cent in April, this is the seventh monthly rise in a row, and however these figures are still below market expectations of a 1.5 per cent increase. The value of home loan approvals was also up by nearly 2 per cent.
The average size first home buyers' loan eased slightly over the last month from nearly $286,000 to $283,400. The average first home buyers' loan, the second highest average loan value in the housing series, is nearly $20,000 higher than the average loan size for all owner-occupied housing commitments.
The market has been inundated with first home buyers recently encouraged by the substantial boost to the Federal Government's first home owners grant to $14,000 on existing homes. The average size loan for first home buyers has increased by nearly $20,000 since the boost was announced. First home buyers choosing a new home can claim up to $21,000 in government grants.
Although the boost grant was originally going to end at the end of June, due to changes in the budget it will now continue in full until October the 1st. After that, it will be halved to $10,500 on existing homes, and $14,000 to new homes. The boost will end on the 31st December, but the existing $7000 first home owner's grant will continue.
Andrew Hanlan Westpac's senior economist stated that the deadline had encouraged first home buyers to rush to the market, while other investors could take their time to make decisions, first home buyers had to hasten their decisions due to the grant. Mr. Hanlan also felt that there was a dramatic improvement in housing affordability with mortgage rates now the lowest since 1968.
Economists had forecast a 1.5 per cent increase in the number of owner-occupier housing finance commitments. The figures have also shown that a number of people are choosing to fix loans, suggesting that Australians are thinking that the run of interest rate cuts have come to an end.
Mr. Hanlan also suggested that there was upward pressure on fixed rates, but added that the Reserve Bank could possibly still cut rates further before the end of the year.