As noted yesterday by ANZ, the ABS’ housing finance figures for February 2013 revealed ongoing weak demand from first home buyers (FHBs).
While the number of FHB mortgage commitments rose by 2% in February, they were down by -19% over the past year and were -39% below the 5-year moving average (5YMA):
Despite the modest lift in numbers, the proportion of total owner-occupied loans going to FHBs fell to -14.4%, which was the lowest reading since mid-2004 (see next chart).
The overall slump in FHB mortgage demand has been driven by New South Wales and Queensland, where the number of commitments remain just above the record lows set last month, and have fallen off a cliff since FHB grants on pre-existing dwellings were removed in October 2012. Victorian FHB mortgage demand has also fallen quite sharply since mid-2012, whereas Western Australia’s is in an uptrend (see next chart).
As a percentage of total owner-occupied finance, the number of FHB commitments in New South Wales and Queensland recovered ever so slightly in February, but remained near the record low levels set last month. By contrast, FHB demand in Perth continues to boom (see next chart).
The dearth in FHB demand is currently being filled by investors and upgraders, whose commitments have trended upwards over the past year (see next chart).
While FHB commitments retrace, investor commitments rose by 2% in February, by 15% over the year, and were at the highest level since February 2008 (see next chart).
With home prices rising, and FHBs increasingly absent, it’s only a matter of time before calls for the FHB grant on pre-existing dwellings to be re-instated intensify under the false pretense of improving housing affordability.
