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In September last year, Mortgage Choice surveyed one thousand first home buyers (FHBs) and found that more than 21 per cent (at least one in five) are now electing to buy an investment property as their first property purchase.
“This is significantly up on what that number would have been five years ago,” Mr Russell said.
“They are electing to rent in an area they want to live in and can't afford and are investing in an area they don’t want to live in and can afford,” he said.
“This is skewing the comparisons being made. We really hope that the regulators looking at trying to stymie the growth in investor lending will look beneath the numbers. This buying behaviour change is very real.”
Mr Russell believes that the increasing appetite of first home buyers for investing in, rather than occupying, their first property is inflating the investor lending composition that concerns the RBA and APRA.
He argued that the jawboning of the central bank and prudential regulator is “unfounded” and that their interference in investor lending is tenuous, given the context of low economic growth and high unemployment.
Meanwhile, earlier this month, the Australian Bureau of Statistics admitted a 26 per cent error in its first home buyer statistics.
A new reporting method, announced by the ABS on February 11, revealed there are 26 per cent more first home buyers in the market than was previously claimed.
The latest housing finance figures put the number of FHB loan commitments at 6,061 as of November 2014.
However, the revised figures put the number of commitments at 7,627, up 26 per cent.
The ABS has since released an information paper detailing changes to its method of estimating loans to first home buyers.
This follows an ABS investigation of the accuracy of estimates for loans to these buyers.
The investigation revealed a degree of under-reporting by some lenders on loans to first home buyers. This was because some lenders were not including figures for first home buyers who did not receive first home owner grants.
“We knew the data we were providing to the banks was not allowing the ABS to identify the true volume of homeowners buying established property,” Mortgage Choice’s Mr Russell said. “The ABS has now recognised this.
“We have the RBA and APRA looking at investor lending closely. We are encouraging the media and encouraging the regulators to look through the numbers because we are not comparing apples to apples."
Mortgage Choice franchisees have provided anecdotal evidence to support the group’s findings that one in five FHBs are choosing an investment property.
“If you go back four or five years there is no way 21 per cent of FHBs were buying investment properties as their first home,” Mr Russell said.
“We just need to delve into the numbers a bit more before we start to impose any regulatory slowdown in investor lending,” he said.
“The second thing is the timing of the slowdown. With house prices cooling, GDP under 3 per cent and unemployment on the rise, you really have to question why you would be slowing down the housing sector at this time.”