Low interest rates have failed to attract first home buyers to the market, with the situation expected to deteriorate when rates eventually rise.
Analysis of Australian Bureau of Statistics (ABS) data by comparison website finder.com.au shows that there are fewer first home buyers now than there were before the government introduced grants in an effort to stimulate the market.
The proportion of first home buyers has hit a new record low of 12.26 percent out of all loans financed in April.
Finder.com.au director Fred Schebesta said that the outlook is expected to worsen, as interest rates are likely to rise, discouraging even more prospective first home buyers from entering the market.
“The forecast is looking bleak for many Australians who are already struggling to get onto the property ladder,” Mr Schebesta said.
“Even though the cash rate has sat at a record low of 2.5 per cent for almost a year, it hasn’t encouraged more Australians to enter the property market,” he said.
“In fact, we’ve seen a decline in the proportion of first home buyers out of all loans financed since the cash rate began to fall in November 2011.”
Since then, the proportion of first home buyers has dropped from 20.21 percent to 12.26 percent, Mr Schebesta said.
“At this rate, the proportion of first home buyers is expected to drop to about one in 10 (11.26 per cent) of all home loans financed by 2015 (based on average month-on-month growth rate of the past two years),” he said.