FHB activity surges in NSW and Victoria

The latest housing finance figures from the ABS, released on Wednesday, 17 January, show that the number of first home buyer commitments as a percentage of total owner-occupied housing finance commitments rose to 18.0 per cent in November 2017 from 17.6 per cent in October.

The value of all housing finance commitments increased by 2.3 per cent over the month to $33.5 billion, driven by owner-occupied housing (up by 2.7 per cent) and investors (up by 1.5 per cent).

“Housing finance approvals posted solid growth in November, with increases across each of the owner-occupier, investor and first home buyer segments,” ANZ Research noted.

“The policy and regulatory changes of the last 12 months are still being felt, with investors accounting for a smaller share of the market and first home buyers increasingly able to enter the market.

“The number of monthly FHB approvals is now up [by] more than 60 per cent in New South Wales and nearly 50 per cent in Victoria since the state governments’ stamp duty discounts were introduced in July 2017.”

ANZ noted that this activity is putting upward pressure on prices at the lower end of the market. In six months of stamp duty discounts, the value of the bottom quartile of properties in Melbourne has increased by 8 per cent, well above the 3 per cent growth of the total Melbourne market.

“Even in the weaker Sydney market, where overall prices have fallen by 2 per cent over the same period, the value of properties in the bottom quartile has nudged higher by 0.5 per cent,” the bank said.

Westpac senior economist Matthew Hassan said that finance approvals held up better than expected through most of 2017, despite a material slowdown in housing markets evident in auctions, price growth and turnover.

While the latest ABS figures show that investor borrowing has now increased over the last two months, approvals are still 8 per cent lower than they were a year ago.