Across the nation, the past few years have seen first home buyers holding back, keeping a keen eye on interest rates and waiting for that perfect time to buy. However, for many first home buyers, the first quarter of this year has been a great time to buy, with well priced property in many states set against a backdrop of rising rental prices. So just what have the first home buyers been up to this year?
Number of Loans to First Home Buyers
Average First Home Buyer Loan Amount ($)
New South Wales
New South Wales’ First home buyers were busy in the March quarter, making up 26.3% of all first home buyers in the market. However, the number of loans taken out by first home buyers decreased by 44.6% compared to the December quarter. This is relatively consistent with the seasonal impact that is experienced in the March quarter each year. Despite this inter-quarter fluctuation, the total number of loans increased by 7.1% year on year, 6,205 compared with 5,792 respectively, a positive sign for the NSW property market. The average loan amount to first home buyers dropped 4.1% over the year to $291,600.
Despite recording an improvement in housing affordability, New South Wales still remains the least affordable state in which to buy a home. The proportion of income required to meet loan repayments in Q1 was 36.5%, a decrease of 0.7 percentage points compared to Q1 last year. However, this figure is still 4.5 percentage points higher than the nation’s average.
Early signs of market recovery for Victoria have seen a jump in the number of loans to first home buyers compared to the same time last year. Q1 2012 saw the number of loans increase 12% compared to Q1 2011, rising from 5,494 to 6,153.
The average loan amount remained relatively stable year on year, with a slight increase of 0.5% compared to Q1 2011, to $280,033.
The good news for Victoria is that over the year, the state recorded the largest improvement in housing affordability across the country. The proportion of income required to meet loan repayments decreased 1.6 percentage points to 31.5%. This improvement is largely due to an increase in the median family income and a decrease in average monthly loan repayments.
The Sunshine State has seen positive growth in the first home buyer segment so far this year, with a 44.5% increase in the number of loans compared to Q1 2011, to a total of 5,076. The average loan size decreased year on year, falling by 0.8% percentage points to $272,533, an indication of the market beginning to balance as supply meets demand.
In terms of housing affordability, Queensland recorded the third largest improvement out of all states. The proportion of income required to meet loan repayments improved by 3.4 percentage points to 29.5%.
During the March quarter, the total number of loans taken out by first home buyers in South Australia was 1,355. This figure represents an increase of 14.3% compared to Q1 last year, a good sign that first home buyers are regaining confidence in the market. The average loan size remained stable year on year, with a negligible decrease of 0.1% to $234,733.
South Australia recorded the largest improvement in housing affordability over the quarter, however it still remains the second least affordable state in which to purchase a property. The March quarter revealed that the proportion of income required to meet loan repayments in SA is 32.5%. This is 1.7 percentage points lower than the same time last year.
Western Australia saw a renewed interest from first home buyers over the March quarter, with many being driven into the market by rising rental prices. WA reported the largest increase in home loans taken out by first home buyers, a total of 3,910. This figure represents a substantial increase of 36.4% compared to the March quarter in 2011.
The average loan size to first home buyers also increased by 6.5% year on year to $287,000. WA was also the only state to record an increase in the average loan size between the December and March quarters, rising by 2.8%.
Housing affordability in WA declined by 2.3% since the March quarter last year, with the proportion of family income required to meet loan repayments rising to 24.1%.
For Tasmania, first home buyer activity has remained steady this year, with a total of 344 first home buyers taking out loans. Interestingly, this figure is identical to that recorded in the March quarter of 2011, indicating no change year on year. Despite the stability in the volume of loans taken out, the average loan amount has increased by 4.4%, rising to $197,533.
Housing affordability in Tasmania has improved compared to Q1 2011, with the proportion of income required to meet home loan repayments decreasing 1.7% to 26.5%.
Out of all of the states in Australia, the Northern Territory has the highest proportion of home loans to first home buyers. Within the Territory, the March quarter saw a considerable increase of 44.9% in the number of first home buyer loan commitments, with a total of 229 loans to first home buyers. The average loan size increased 3.7% over the year, rising to $304,333.
The Northern Territory is the second most affordable state in which to buy a home, despite the proportion of income required to meet loan repayments increasing slightly by 0.4 percentage points over the year to 22.8%.
Australian Capital Territory
Many first home buyers recognise that the ACT is Australia’s most affordable state/territory in which to purchase a home. During the March quarter this year, the number of first home buyers taking out loans was 19.3% higher than a year ago, with a total of 365 loans taken out during the quarter. The average loan size for first home buyers decreased by 5.3% compared to Q1 2011, to $289,967.
Since March 2006 the Australian Capital Territory has been the most affordable state in which to buy a home, and this has remained unchanged in Q1 2012. The proportion of income required to meet home loan repayments decreased 0.3 percentage points over the year to 18.3%.