NSW pulls down FHB finance approvals

By Leith van Onselen

Following on from yesterday’s housing finance release from the ABS for the month of October, the below chart compares the growth of first home buyer (FHB) housing finance approvals following the latest round of interest rate cuts (-1.75% since November 2011) to the average of the four prior interest rate-cutting cycles commencing in 1990, 1996, 2001 and 2008.

As you can see, in the latest cycle, the total number of FHB housing finance commitments as at October 2012 had grown by nearly 9% from a year earlier. This compares to average growth of 32% at the same state of the prior four rate-cutting cycles.

While the overall response from FHBs is relatively subdued compared with prior rate-cutting cycles, the number of FHB commitments has been pulled-down significantly by New South Wales, where FHBs retreated following the removal of stamp duty concessions on 1 January 2012:

With the exception of Tasmania, the other states and territories have experienced stronger growth than the national average, with the number of FHB commitments growing by between 12% (South Australia) and 46% (Western Australia) in the year to October 2012.

It will be interesting to see whether there is any drop-off in FHB commitments in Queensland following the cancellation of grants on pre-existing  dwellings from mid-October 2012.

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.


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  1. TheRedEconomistMEMBER

    First home buyer activity spiked in NSW in the lead up to the removal of the $7K First home buyer grant on existing property ceased on September 30, 2012.

    I know of a few renters that decided it was time to jump in and buy.

    This was even though the interst they were paying on the money borrowed to buy, far exceeded the money they spent on rent.

    I continue to rent and save or invest the surplus cash I would paying to the bank as interest on a mortgage

    • Another day another desperate attempt at market manipulation by the governments of Australia……this time it’s Tasmania pulling threads again reviving the FHB boost grant with an additional $8k on top of the standard $7k. Let us not forget that this is done whilst healthcare and education budgets are cut. It is so bloody obvious it is not funny whose pockets these bottom dwellers that represent us in their various forms are in.

      We have an unregulated real estate industry that has become a monster to say the least. We have government that cannot be trusted, government that publish misleading statistics, so the citizen is played like a fiddle.

      When is this going to end…a shock on the richter scale is what it will take and by all real measure it is coming after the tremors we all feel now yes those people who do not earn $200k a year or combined incomes of the same, oh hang on those elitist government and corporate bureaucrats and our feudal lords that are meant to govern us excepted as they lavish in prosperity and confidence.

      And on it goes…