Today’s housing finance figures for January 2013 revealed a continued slump in demand from first home buyers (FHBs).
At the national level, the number of FHB mortgage commitments fell by -11% in January and were down by -28% over the past year. It was the lowest reading since January 2011, when figures were adversely affected by the Queensland floods, and were -41% below the 5-year moving average (5YMA):
The proportion of total owner-occupied loans going to FHBs was steady at 14.9%, however, which was the equal lowest reading since June 2004 (see next chart).
At the state level, the fall in FHB mortgage demand was driven by New South Wales and Queensland, where the number of commitments fell to record lows of just 773 and 750 respectively, and have fallen off a cliff since FHB grants on pre-existing dwellings were removed in October 2012 (see next chart).
As a percentage of total owner-occupied finance, the number of FHB commitments in New South Wales and Queensland fell to just 7% and 10% respectively in January 2013, which again was a record low (see next chart).
The leading indicator of AFG Finance commitments suggests that there has been a small rebound in QLD FHBs in March but NSW is still at its lows.
With investor finance commitments continuing to rise – they jumped by 4% in January 2013 and were up by 19% over the year (see next chart) – expect housing industry calls for the FHB grant on pre-existing dwellings to be re-instated to grow louder in the name of housing affordability.
unconventionaleconomist@hotmail.com
Could it be the case that each downward move in interest rates simply creates greater opportunity for investors with plenty of equity to horse-trade property with each other, with or without FHB being much of a presence in the market?
The situation seems to be growing more bizzare and dysfunctional.
It’s simply an intergenerational feast of baby boomers eating their young.
That is exactly what it is. More to the point they (the young) are being served with a side order of tax breaks, a backing chorus of media hype, and a grotesque refusal by both sides of politics to actually acknowledge the issue for desert.
Well said. It does seem that way.
It’ll be a boomer blood path when it pops!
I’m not so sure. I reckon it will just be years and years, decades even, of disappointment. Many I know may age (mid BBer) refuse to accept that property could fall. They’ve seen time and time again that it doesn’t and will hang on until death if necessary. Financial pain and hardship? Yes Blood bath….doubt it.
“It’s simply an intergenerational feast of baby boomers eating their young.”
‘It’s simply an inter-sectoral feast with the non-productive investment eating the whole productive economy’
“expect housing industry calls for the FHB grant on pre-existing dwellings to be re-instated to grow louder in the name of housing affordability”
Yep, definitely time to fire up ‘em grants on established dwellings!
Or maybe introduce a home-sellers grant. Give developers $20k for each dwelling they sell to a first home buyer – that should stimulate some price competition to get construction going.
Any grant at this stage will make this quango EXPLODE.
Tee hee!
Ozzie housing market = a quango (an organization or agency that is financed by a government but that acts independently of it).
Noice!
I have commented in another story that sales for Jan/Feb appear to have fallen off a cliff and the data you present confirms that. So, on with the falls. Good news indeed.
Not sure where you’re seeing that.
In the PDS data for QLD and NSW and advice from several agents.
Have you a postcode you would like me to check on?
Do you not see it in the data in this story?
I’m impressed so far from yesterdays conversation, WillyN. Thx.
sorry willywilly but your data is most likely wrong, feb has been booming month in qld, you should call PDS far more details.
And your postcode that you want me to check is?
Actually, just realised that I debunbked your postcodes yesterday.
not sure what you re expecting to debunk using your incomplete data, just proving that your data is incomplete ? it should at least match realestate.com.au/sold (which also you be incomplete).
arguing that feb has been a slow month is look a bit silly IMO.
Well time will tell…..be patient.
willy nilly…if you are still around and volunteering….Sunshine Coast….4556
My observations are that the lower end of the market appears (to me) to be booming. Lots of sales.
Speaking to someone who has flipped houses through time and is trying to sell one at $700K (at Caloundra)now there are almost no lookers let alone buyers.
Flawse – i was just up at the sunshine coast and it really is carnage. Investors are praying for a bounce, late investors are way under-water.
Buckets of stuff for sale.
What really struck me but is that the infrastructure boom is over – all the roads are built, the shopping centres are in place etc – there is just no way the work that was once there is coming back (failing population growth – and really the corporates are lobbying hard for this so this probably will happen)
While ya at it Willy take a look at 4575. With the new hospitals under construction everything seems to be selling. Also what was selling last year at 400K is now selling at around 425K.
Last year I was the only one in most OFI I attended but this year there seems to be around 8-10 groups through with a 60 / 40 mix of BB investors / FTB
The interesting aspect will be the political response.
Or lack of response. It is qiute clear now that housing affordability is a vote issue, not rising house prices.
That is an interesting dynamic that is starting to come into play. I understand the Unions have raised it prominently with the ALParatchiks (not that they will be in power after the election) in terms of affordability not just being access to an ever mega mortgage.
If prices blow out under a govt of any persuasion from here it may not result in a backlash, but sure wouldnt encourage younger punters to vote for them
It was one of the main policy platforms of Rudd’s original campaign.
The career political eunuch has a lot to answer for on all sides of poltics.
The most interesting aspect for you is the political response?? Talk about wear your heart on your sleeve….
If I was PF, I wouldn’t be interested in the collapse in demand either!
Pete,
If a mortgage broker screams in brisbanes western suburbs will the member for Moggill hear.
How would I know David, I don’t know the member for Moggill and nor am I screaming.
I’m merely wondering what the politicians will do – It’s all good as far as I’m concerned.
Luv to Libby….
can’t actually hear the sound of a mortgage broker screaming in queensland for the sound of mortgage brokers screaming.
Well house price growth has clearly accelerated since the policy change – so perhaps going back to the way it was will slow things down again
Probably really a bit of the wealthy families eating the poor – most young guys and gals buying houses and investment are doing so with money from their parents.
What cracks me up the most is that the f.kwits that support the Labor party for class reasons have really just supported a party that has more than anything helped exacerbate the housing problems of the poor to benefit of the rich baby boomers and show no inclination of changing.
Hilarious
That is how it has worked throughout history, it is not a recent phenomenon, and applies to both sides of politics.
By definition pollies are targeting the middle 50%, the rich can protect themselves from adverse policy as they have the means to do so, but the poor are another story.
bottom of the pyramid scheme getting narrower…
and yet auction clearance rates and mortgage debt levels are on the up and up.