Published on November 17th, 2017
Analysis: Do recent buyer trends mean the Great Australian Dream is coming true?
NICOLA POWELL NOV 17, 2017
NSW is undergoing a shift in the type of buyer active in the real estate market, as a tidal wave of first-home buyers step on to the property ladder.
The incentives introduced by the NSW government, which came into effect on July 1, have had a remarkable impact on stimulating entry-level buyers, perhaps to a greater degree than initially anticipated.
The incentives significantly reduced upfront costs by abolishing stamp duty on new and established homes under $650,000 and brought in a sliding concessional scale up to $800,000.
During the first quarter of the 2017-18 fiscal year, the number of first-home buyer loans approved soared to 6775, leaping ahead of the 4295 entry-level commitments approved in the 2017 June quarter, and the 3965 approved in the September 2016 quarter, according to ABS housing finance data.
August provided the greatest boost to entry-level buyers, with 2426 first-home loans approved. This was the highest monthly activity since January 2012
During the three months leading up to September, August provided the greatest boost to entry-level buyers, with 2426 first-home loans approved. This was the highest monthly activity since January 2012. The monthly figure falls significantly below the peak of March 2009, which reached 6241 approved loans.
September 2017 figures reveal that 2399 first-home buyer loans were approved, increasing 86.8 per cent from the 1284 in September 2016.
Activity from buyers already on the property ladder is in decline. During the September 2017 quarter, 46,492 loans were approved for non first-home buyers (defined as owner-occupied borrowers excluding first homebuyers), down from the 46,823 in the June 2017 quarter.
NSW first-home buyers are borrowing more than any other state or territory. September 2017 saw the average NSW first-home buyers borrow $350,900, a far distance from the peak of $396,500 in October 2016.
Related: Should your home have sold already?
Non first-home buyer approval rates slipped from August to September, triggering a warning sign because September signals the beginning of the spring selling season.
The softening commitment is a wider reflection of market conditions where house and unit prices made a quarterly moderation.
What does it mean for the broader market and for the next round of first-home buyers? Ultimately, the notion of incentives adding to the end price, whether a cash boost or tax cut, comes into the debate.
An elevation of buyers in the entry-level category will eventually put pressure on available stock within this price-point.