First home buyers are losing out to investors. Photo: Ken Irwin
First home buyers are continuing to lose out to investors with the number of loans to property debutantes crashing to a record low.
Loans to first home buyers as a proportion of total new home loans fell 4 per cent in the year to April – after plunging 12.3 per cent that month – equalling the record low set last November.
This compared with loans to investors surging 29.9 per cent in the same 12 month period, after a 2.3 per cent rise in April.
Low levels of consumer confidence have spilled over into the housing market. Photo: Arsineh Houspian
St George senior economist Hans Kunnen attributed the lack of first home buyers to state governments scrapping first home buyer grants for existing dwellings, and a ''solid increase '' in house prices during the past year.
''State policies appear to have had their desired impact in directing first home buyer demand towards newly built homes rather than established dwellings,'' Mr Kunnen said.
Still, ANZ senior property analyst David Cannington said the Bureau of Statistics' data continued to show a market ''dominated by investors and upgraders/downsizers, while first home buyer activity remains at historical lows''.
First home buyer mortgages hit their peak in May 2009, when they accounted for 31.4 per cent of total new home loans.
Overall, the home loan market remains soft, economist say. Total housing finance edged 1.7 per cent higher in April, taking the annual figure to 20.7 per cent.
Mr Cannington expected the loan market to remain flat in coming months, citing the negative reaction to the Abbott government's first budget, which included cuts to welfare, pensions, a debt tax as well as higher petrol and medical prices.
''Consumer confidence has weakened sharply in the past month, reflecting the sensitivity of sentiment to Budget measures, presenting a softer outlook for house price growth, home sales and housing finance going forward,'' Mr Cannington said.
But he said low interest rates with the Reserve Bank likely to keep hold off any decision on rate hikes for at least a year, combined with ''pent-up'' buyer demand, will ''go someway to offsetting the negative impact of weaker market sentiment''.
''Moreover, strong growth in finance for residential construction and elevated building approvals, particularly for inner-city high-rise apartments, is likely to support building activity into the second half of 2014.''
Master Builders Australia chief economist Peter Jones said although total housing finance was flat in April, growth remained solid over the year.
''Investors remain a key driver of the upturn in residential building activity, with the value of commitments for investment housing continuing to power ahead,'' Mr Jones said.
''Builders will be encouraged to see that overall, finance commitments underpinning the upturn in residential building activity are holding up.''
There have been some questions about the way first home buyer statistics have been calculated, with the RBA dropping reference to the figures from its economic data chart pack for June.