realestatebusiness logo

Subscribe to our newsletter

FHB activity to decline as house prices escalate: Archistar

First home buyer loans hit its second highest level in over a decade in February, but levels are expecting to drop as house prices continue to rise, according to a proptech.

Following the release of the latest lending figures from the Australian Bureau of Statistics, Dr Andrew Wilson, chief economist at proptech company Archistar, suggested that while first home buyer activity remains strong, the outlook is “problematic for realising the great Australian dream” given rising house prices.

The Australian Bureau of Statistics’ (ABS) lending indicators data for February 2021, released earlier this month, showed that new loan commitments for housing fell for the first time since May 2020, dropping by 0.4 per cent to $28.6 billion in February (seasonally adjusted terms).

The value of new home loan commitments for owner-occupiers fell by 1.8 per cent to $21.7 billion in February.

This followed a 10.9 per cent increase in January to $22.1 billion, the highest monthly figure on record and the first time this segment broke the $22-billion mark.


However, commitment levels have remained strong compared with last year, with ABS figures showing that new loan commitments for housing increased by 48.8 per cent in February 2021 from February 2020, while owner-occupier housing increased by 55.2 per cent.

The figures show that national lending for first home buyers fell by 3.3 per cent over February, seasonally adjusted, the first monthly decline since May 2020 at the height of the autumn coronavirus shutdown.

Noting the figures, Dr Wilson commented: “Despite the monthly fall, 16,167 first home buyer loans were approved over the month, the second highest result since June 2009. 

“Lending to first home buyers has surged by 68.3 per cent over the first two months of this year compared to the same period last year.”

The chief economist outlined that the decline in first home buyer lending largely reflected a sharp fall in Victoria where activity was down by 5.2 per cent, with all other states reporting monthly increases. 

He added that Victoria, however, remained the top performer for first home buyer loans with 4,142 approved over the month, followed by Queensland 3,078; NSW 2,747; Western Australia, 2,362; and South Australia, 972.

“NSW, however, remains clearly the most expensive state for first home buyers with an average loan over February of $497,925, followed by Victoria $442,805; Queensland, $379,597; WA $372,947; and SA, $335,802.”

He continued: “First home buyer activity remains at the highest levels since the record-breaking period in 2009 courtesy of low interest rates, a reviving economy and various government stimulus policies directed to the group.”

However, he warned: “With home prices now rising sharply in booming housing markets and government policy initiatives expired or diminishing, the likelihood of continuing strong first home buyer activity is quickly declining.”

Indeed, Archistar has previously noted that house prices have been accelerating at their highest rate in years due to strong buyer demand and record-low interest rates.

Indeed, last week, the REA Insights’ Housing Market Indicators Report revealed that the average number of days properties are listed for sale on realestate.com.au had reached new records in every state in March.

According to REA, the average number of days for a property to be listed on the website was 48 days in March 2021, down from an average of 71 in June 2020.

Properties sold the fastest in the ACT (25 days), followed by NSW at 27 days and Victoria at 30 days over March.

On the other hand, properties took the longest time to sell in Western Australia, where they averaged 71 days on the website, while in the Northern Territory, properties were listed for an average of 59 days before they were sold.

Despite this, the report revealed that Western Australia and the Northern Territory have seen the largest falls in average time on site, decreasing by 28 and 14 days, respectively.

According to the report, average views per listing also reached record highs in March (up 6.1 per cent), while views rose by 106.8 per cent nationally year-on-year.

The report’s author, REA Group economist Anne Flaherty, attributed this rise to various factors, including record-low interest rates, government support packages for first home buyers, and limited available stock.

[Related: Properties selling at record speed: research]

FHB activity to decline as house prices escalate: Archistar
FHB activity to decline as house prices escalate: Archistar

Latest News

The increasing sophistication of identity fraud will result in the death of video and audio identity verification by the end of this decade,...

The Bank of England has removed the affordability buffer for British borrowers this month in a bid to remove some barriers to lending as co...

The non-bank group has announced it will sell its insurance business, Hallmark, which would inject $20 million into its core business. ...


Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think the new NSW property tax will help or hinder first home buyers?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.