Home buyer profiles continue to change

New data from the ABS and APRA have provided updated insights into the housing lending space, which is highly correlated with trends in home prices and sales volumes.

Lending for the purchase of property hit record highs through April 2021. However, the concentration of mortgages regarded as “higher risk” remained around average levels through the start of the year.

As new lending continues to rise, ABS housing lending indicators have pointed to a continued shift in the profile of the buyer, with first home buyer lending falling for a third straight month against a rise in other types of secured finance.

During April 2021, approximately $31 billion was lent for the purchase of property in Australia. This was up from $30 billion in the previous month and marks a record high for the series.

The charts below show the change in the value of lending to different property buyer groups in the three months to April, as well as the share of total finance that each buyer group accounts for.


The total value of finance increased 14.9 per cent in the three months to April 2021, compared to the previous three-month period.

While the investor segment saw the fastest increase in the value of finance, owner-occupier buyers who were not first home buyers (such as up-sizers, movers and down-sizers) maintained the most dominant share of housing finance for the purchase of property by value.

Owner occupier non-first-homebuyers accounted for 52.5 per cent of housing finance, compared to a decade average of 49.0 per cent.

First home buyers finance comprised 21.5 per cent of total borrowings for the purchase of property during April, marking the fifth month of consecutive decline in first home buyer share of the value of borrowing.

Despite the declining share, it remains well above the decade average of 15.7 per cent.

It is also worth noting that while first home buyer finance is higher on a quarterly basis, the combined value of lending for first home buyers has started to decline in month-on-month terms.

This included a -1.9 per cent fall during the month of April, while non-first-home-buyers finance shot up 7 per cent in the same period.

Compared to first home buyers, owner-occupiers (and some investors) who already own a home may be better equipped to participate in a dwelling market when values are rising, as existing housing assets may have seen an uplift in value from the broad-based housing boom.

The share of investor finance secured for the purchase of property was 25.9per cent and although rising, is well below the 35.3 per cent decade average.

The recent change in the trajectory of first home buyer and investor mortgage share reflects greater challenges for first home buyers. Affordability is becoming strained as national dwelling values have risen 10.1 per cent in the year-to-date alone.

The decline in first home buyer activity also reflects a tapering in government assistance.

The HomeBuilder scheme, which was popular for its compatibility with first home owner grants and stamp duty discounts, ended in March 2021. This has likely contributed to the decline in first home buyer demand.

Investor activity has been most concentrated in NSW. As of April, 30.6 per cent of the value of housing finance for the purchase of property was secured by investors across NSW.

Queensland has also seen a notable lift in investor concentration, with 25.7 per cent of finance secured by investors, which is the highest level since October 2018.

Written: 2 July 2021

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