Canberra home buyers bucking national trend amid interest rates spiral

Adrian Rollins
Updated December 8 2023 - 11:05am, first published December 5 2023 - 5:30am

The ACT is at the forefront of a national surge in borrowing by first home buyers, with almost half of new mortgages in the territory being taken out by new entrants to the market - the highest proportion in the country.

The number of loans being taken out by first home buyers nationwide jumped 5.1 per cent in October to be up almost 7 per cent from a year earlier, according to the Australian Bureau of Statistics.

WATCH: Labor has unveiled its long-awaited housing policy

In the ACT, the proportion of all mortgages that are taken out by first home buyers reached 43.6 per cent, eclipsing the next highest, Victoria (42.5 per cent) and well in excess of the national average of 38.1 per cent.

The ABS data show that while borrowing by first home buyers in Canberra has held up reasonably well this year, the overall appetite to take on new mortgages has faded since interest rates began to march up last year.

Canberra home buyers are bucking a major national trend. Picture Shutterstock
Canberra home buyers are bucking a major national trend. Picture Shutterstock

In May 2022, there were 1110 loans to owner-occupiers, but that number dropped to 644 in October. Over the same period, the number of first home buyers taking out a loan eased from 322 to 235.

The stamp duty on house purchases in the ACT has been ratcheting down since 2012, and the ACT has enacted concessions for off-the-plan and dual occupancy purchases.

Nationally, first home buyers are borrowing, on average, $507,000, while the average mortgage taken out by all homebuyers grew 2.1 per cent in October to $564,000.

In a possible sign that competition between lenders is slackening, the number of borrowers switching loans dropped 12.4 per cent in October to reach 20,518, almost 8000 fewer than in July.

The banking regulator, meanwhile, has resisted pressure to loosen lending standards, reaffirming that lenders need to apply a 3 percentage point mortgage serviceability buffer when assessing loan applications.


"It provides an important contingency for new borrowers facing the risks of weaker conditions in the labour market, persistently high inflation and the potential for further increases in borrowing rates," the Australian Prudential Regulation Authority said.

High lending standards have been credited with helping keep the number of mortgage arrears and defaults at very low levels despite the 4.25 percentage point leap in interest rates since May last year.

There have been some calls for the standards to be eased to make it easier for new home buyers to enter the property market.

Alternatively, there has also been pressure to make them even stricter or time impose lending limits to support the central bank's efforts to reduce demand.

But APRA chair John Lonsdale said the existing settings "remain the right ones for the current environment".

Adrian Rollins

Adrian Rollins


Adrian Rollins is economics correspondent for the Canberra Times

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