Remaining first home buyers in the market would typically be those with generational wealth and high salaries, experts said.<\/li>\n<\/ul>\nProperty listings<\/h2>\n
The most recent property boom caused one of the steepest falls in first home buyer activity in 20 years, indicating a sharp decrease in affordability as prices spiked.<\/p>\n
The amount of new loans granted to first home buyers declined sharply during the October 2020 to April 2022 property boom, CoreLogic analysis of ABS data showed, from a peak of more than 16,000 a month to below 10,000.<\/p>\n
The sharp drop was comparable to the post-GFC boom between February 2008 and June 2010, but was a contrast to the extended 2012 to 2017 bull run when first home buyer activity was steadier at low levels, often below 8000 loans a month.<\/p>\n
A common theme between both price explosions and subsequent first home buyer retreats was the removal of incentives designed to help first-home buyers get a leg-up into the market, CoreLogic head of Australian research Eliza Owen said, of the ANZ\/CoreLogic Housing Affordability report, released this week.<\/p>\n
\u201cIt varies a little bit because there\u2019s been different schemes and things introduced in the periods of upswing, but last cycle shows a pretty quick drop off of first home buyer activity after the expiry of HomeBuilder [grant] and the rapid nature of home value uplift has contributed to that as well,\u201d she said.<\/p>\n
\u201c[The data] shows when the market starts to pick up, first home buyers can\u2019t keep up with the pace of increase and the deposit hurdle becomes more pronounced.\u201d<\/p>\n
Since then, interest rates jumped which sparked a steep property downturn last year. Property prices began to recover this year as buyers fought for the few homes for sale.<\/p>\n
The Reserve Bank has held interest rates steady for the last three months, although minutes released on Tuesday showed it considered another hike in its September meeting.<\/p>\n
Westpac senior economist Matthew Hassan agreed the end of HomeBuilder had caused the swift decline in first home buyer activity, in concert with spiking prices.<\/p>\n
\u201c[In 2008 to 2010], again there was a first home buyer scheme rolling out during the [boom] as well,\u201d he said.<\/p>\n
![](\"https:\/\/static.ffx.io\/images\/$zoom_0.149%2C$multiply_0.7725%2C$ratio_1.5%2C$width_756%2C$x_0%2C$y_0\/t_crop_custom\/q_86%2Cf_auto\/73f6bab5918542c6bf24504414d0116ecc6c1786\")
<\/p>\n
First home buyers would be struggling in the rising market, experts say, despite a recent lack of ABS data on the subject. <\/span>Credit: <\/span>Wayne Taylor<\/cite><\/p>\n\u201cBoth of those schemes were temporary, so they led to a big pull forward of demand.\u201d<\/p>\n
Owen said the 2012 to 2017 boom had a low level of, and steady decline in, first home buyer activity when compared to the most recent upswing. This showed that the market drivers significantly affected first-home affordability.<\/p>\n
\u201c[First home buyer activity] does become more subdued as time goes on, and it only really starts to ramp up as the growth of home values starts to slow, and the market reaches a turning point,\u201d she said.<\/p>\n
\u201cWhich might seem counterintuitive because property prices would be pretty high at that point. But 2017 was when we saw a limit on investor activity in the market. It could be that toward the end of the upswing the introduction of those macroprudential policies gave first home buyers a bit more space.\u201d<\/p>\n
The ABS dataset of first home buyer loans has been paused, so it was hard to gauge the response to recent price hikes, Hassan said.<\/p>\n
\u201cI think we\u2019d be seeing weakening activity,\u201d he said. \u201cParticularly since the start of the year with prices starting to rise.<\/p>\n
\u201cFirst home buyers are the most marginal buyers. It\u2019s almost certainly become more difficult in the past six months.\u201d<\/p>\n
Owen said there were still some first home buyers entering the market, but were more likely to be the beneficiaries of intergenerational wealth and high salaries.<\/p>\n
\u201cThis is now a double whammy of a high deposit hurdle and high interest costs,\u201d she said. \u201cIt would be exacerbating inequality.<\/p>\n
\u201cThe first home buyer who is getting into the market now is probably someone who is getting assistance with a deposit, and they would be able to get a loan and service it with a high interest cost. Having a lot of wealth helps and having a high income helps.\u201d<\/p>\n
Owen said the new shared equity scheme offered by the federal government would make it easier for some buyers who would otherwise struggle to buy in the high-rates-and prices environment.<\/p>\n
Cate Bakos Property owner\/manager Cate Bakos said first home buyers were buoyed by government shared equity programs. Victoria already offers one such program and a federal version is set to start next year.<\/p>\n
\u201cBrokers are skilled up with all the initiatives that are available out there to help them,\u201d she said. \u201cThey\u2019re getting a few free kicks without having to pay lender\u2019s mortgage insurance with a 5 per cent deposit.<\/p>\n
\u201cA lot of investors have been selling, and investors typically are owning and selling first home buyer properties rather than family homes.\u201d<\/p>\n
The Morning Edition newsletter is our guide to the day\u2019s most important and interesting stories, analysis and insights. <\/i><\/b>Sign up here<\/i><\/b>.<\/i><\/b><\/p>\nMost Viewed in Property<\/h2>\n
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