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.