First home buyers more active as investors retreatHousing finance
Number of home loans: The number of loans (commitments) by home owners (owner-occupiers) fell by 1.1 per cent in June.
Value of home loans: The value of new housing commitments (owner occupier and investment) fell by 1.6 per cent in June. Investor loans are at 5-year lows.
First home buyers: The proportion of first home buyers in the market hit 6-year highs. 
What does it all mean?
Investors may have retreated but those buying homes to live in remain active in the market, especially first home buyers. Certainly the regulators can claim success in taking heat out of the market with tighter restrictions on residential property investors. But the broader housing market has also changed. There is now greater balance between supply and demand in many capital city and regional markets and that has meant less upward pressure on home prices.
The prospect of ‘super-normal’ returns in the housing market has led to more circumspect investors.
But improved housing affordability continue to attracts first home buyers. Low and stable interest rates, less frothy home prices, firm population growth and stronger job markets are continuing to support owner-occupier housing demand.
The value of loans taken out by owner-occupiers is only 2.5 per cent below the record high set in February.
What do the figures show?
Housing finance – number
The number of loans (commitments) by home owners (owner-occupiers) fell by 1.1 per cent in June – the sixth fall in seven months. Loans are down by 5.0 per cent on the year – the biggest fall in 14 months.
Excluding refinancing of dwellings, the number of loans fell by 0.5 per cent.
Loans by owner-occupiers for the construction of homes rose by 2.5 per cent.
Loans to buy newly-erected dwellings fell by 4.9 per cent, the fourth straight fall.
Loans for the purchase of established dwellings (excluding refinancing) fell by 0.7 per cent.
The number of refinancing transactions fell by 2.4 per cent – the fourth fall in five months.
Changes in home loans across the country: NSW (down 1.8 per cent); Victoria (down 0.8 per cent); Queensland (up 2.1 per cent); South Australia (down 1.8 per cent); Western Australia (down 4.6 per cent); Tasmania (down 1.9 per cent); Northern Territory (up 1.7 per cent); ACT (down 1.3 per cent).
Housing finance – value
The value of new housing commitments (owner occupier and investment) fell by 1.6 per cent in June.
Owner-occupier loans fell by 1.0 per cent and investment loans fell by 2.7 per cent to 5 year lows.
The value of loans by owner-occupiers and investors to build new homes rose by 6.4 per cent in June to $3.15 billion. It was the third straight gain in loans but they are still down 3.6 per cent on the year.
Housing finance – other statistics
The value of cancelled loans totalled $1.254 billion in June, down from $1.459 billion a year earlier.
Commitments actually advanced (loans made) totalled $21.1 billion, down 1.1 per cent on a year earlier.
The proportion of first-time buyers in the home loan market rose rose from 17.6 per cent to 18.1 per cent in June – a near 6-year high (decade-average 17.8 per cent).
The proportion of fixed rate loans fell from 12.1 per cent to a 19-month low of 11.6 per cent.
And the average home loan across Australia eased from $400,100 to $396,600 in June, but it was still up 5.6 per cent on the year.
What is the importance of the economic data?
Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market.
What are the implications for interest rates and investors?
The rebalancing in the housing market is encouraging. Investors are more cautious; first home buyers are more active. The Reserve Bank will watch the rebalancing carefully, But its just another reason to stay on the interest rate sidelines. Real estate agents and home lenders will need to work harder for business.
CommSec doesn’t expect a change in interest rates until at least February 2019.
Published by Craig James, Chief Economist, CommSec