According to data released by the National Australia Bank (NAB), in the three months to 31 October, lending to first home buyers (FHB) increased by 21 per cent against the 12-month average.
FHBs were the only segment to demonstrate growth in the market during this time, the bank said.
The growth in FHB lending was evident across the country, and while Victoria has had slower overall market activity due to the COVID-19 lockdown, the state’s outer suburbs and regional areas still recorded an upward trend.
NAB’s figures showed that Queensland recorded the strongest growth among the states, with FHB activity up 39 per cent during the three-month period, followed by Western Australia at 37 per cent, NSW/ACT at 31 per cent, and South Australia/Northern Territory at 23 per cent.
However, Victoria/Tasmania lagged with modest overall growth of only 3 per cent.
Commenting on the figures, NAB executive, home ownership, Andy Kerr said: “First home buyers are back in the market at levels we haven’t seen for a decade.
“Demand has been supported by historically low interest rates and more government support, such as the First Home Loan Deposit Scheme (FHLDS) New Homes and HomeBuilder. A brief pullback in property prices also helped FHBs as the uncertainty of COVID-19 put many plans on ice, with investor demand slowing noticeably.
“As a result, many of our customers are telling us they are getting their dream home earlier than they thought possible, which is great news.”
Regional areas in demand, NSW leads
Regional areas across Australia recorded a 44 per cent jump in FHB activity, with regional NSW leading the states at 57 per cent growth, while lending to FHBs in metro areas in NSW climbed 17 per cent.
Mr Kerr said the demand in regional areas has started to translate into higher prices, with November CoreLogic Home Value Index indicating a 5.7 per cent growth in regional areas, compared with capital city growth of 1.1 per cent in year-to-date.
He predicted that this trend of buying property further away from the city centre for lifestyle reasons would likely continue.
“Flexible working arrangements implemented due to COVID-19 are encouraging many Australians to consider a tree or sea change as easy access to the CBD moves down the priority list,” he said.
“Many are seeing the potential of more land and a more relaxed lifestyle with easy access to areas like the Blue Mountains in NSW and Great Ocean Road in Victoria proving very popular.”
Mr Kerr believes that low interest rates, which are expected for at least the next three years, as well as continued government support, should spur robust FHB activity in 2021.
“We’ve seen first-hand the value of the First Home Loan Deposit Scheme and the continued strong demand for it,” Mr Kerr said.
“We expect this demand to continue well into 2021, especially given the current conditions make buying cheaper than renting for many prospective first-time home owners.”
[Related: Home ownership intentions double among FHBs]
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.