First home buyers have grabbed a larger slice of the property pie, while investors’ share shrinks, official home loan approvals figures show.
The number of loans to first home buyers rose to a five-year high in November to account for 18 per cent of total owner-occupied home borrowings.
This is up from 17.6 per cent in October, Australian Bureau of Statistics housing lending data released on Wednesday showed.
JP Morgan economist Tom Kennedy said new mortgage commitments to investors now account for roughly one-third of total loans, well below what it was during late 2016 and early 2017.
“Our expectation is for the share of investor loans to drift a little lower in 2018 as enhanced macro-prudential measures force domestic banks to decrease their exposure to this group,” Mr Kennedy said.
The ABS report said the proportion of first-home buyers has been steadily improving in recent months thanks to changes to first home buyer incentives in NSW and Victoria that came into effect in July.
ANZ senior economist Daniel Gradwell said restrictions introduced in 2017 by the banking regulator, including capping interest-only loans at 30 per cent of lenders’ new mortgages, have slowed investor activity.
“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,” he said.
The average loan size for first home buyers rose $3,300 to $327,100 from October to November, while the average loan size for all owner-occupied housing commitments rose $11,000 to $388,900.
Home loans approved for owner-occupiers rose 2.7 per cent in value to $21.3 billion, while investor loans increased 1.5 per cent to $12.2 billion.
The total value of new home loan approvals rose 2.3 per cent to $33.5 billion in November, beating market expectations of a 0.2 per cent fall.
St George senior economist Janu Chan said while housing conditions were expected to ease in 2018, largely due to investors, overall demand for property was resilient.
“There remains underlying support for housing given the strong pace of population growth and interest rates remaining low,” Ms Chan said.
The number of dwelling commitments rose 2.1 per cent in November, seasonally adjusted, with those for new dwellings up 2.6 per cent.
On a state by state basis, the number of owner-occupied housing commitments rose 2 per cent in NSW, 0.5 per cent in Victoria, 3.1 per cent in Queensland, 8.6 per cent in the Australian Capital Territory, 1.5 per cent in South Australia and 0.7 per cent in Tasmania.
Western Australia and the Northern Territory recorded falls in owner occupied housing loans of 3.5 per cent and 8.5 per cent, respectively.
The Australian dollar jumped following the release of the data, from 79.68 US cents to a session high of 79.98 US cents but retreated later in the day to be at 79.53 US cents at 1414 AEDT.