First home buyers in Victoria the lowest in 23 years

First Home Buyers in Victoria lowest in 23 yearsFrom a first home buyer perspective, there is something very wrong with the housing market in Victoria.

In February, the most recent data available from the Australian Bureau of Statistics (ABS) showed that the total number of dwellings financed for first home buyers had sunk to a 23 year low.

In February there were 1,402 dwellings financed for first home buyers which represented a mere 11.76 per cent of the entire number financed. This was lower than in January when first home buyers represented 12.7 per cent of the market and the lowest in raw terms since July 1991 when the population of Victoria was 31 per cent less than it is today.

The reasons behind this result are debatable. Some will say that the causes are high property prices, but this alone is not borne out by the data. When home values last peaked, in October of 2010, the proportion of first home buyers was 18.2 per cent. In real terms, prices are not significantly different at this point which suggests that the problem is not entirely the price.

Others point to the fact that rents are not rising and suggest that intending first home buyers prefer to rent.

Another perspective is that the change to financial assistance for first home buyers has caused many to not enter the market. At the same time as the large step down in the proportion of first home buyers occurred in the middle of last year, the $7,000 First Home Buyer Grant for established homes came to an end.  This alone cannot be the only issue as at the same time stamp duty was being progressively lowered for first home buyers.

The reasoning for this change in the market is probably a combination of all issues mentioned and if the market remains this way, it will represent a significant structural change in the local housing market.

Robert Larocca
RP Data Victoria Housing Market Specialist

About Robert Larocca

Robert Larocca has built a profile over the past eight years as an expert on the Victorian residential property market. He worked for the REIV both directly and as a consultant over 8 years acting as a spokesperson, managing its research department and public policy. He has been a media and government relations consultant and spent a decade working across the three levels of government including as a Councillor and Mayor in the City of Moreland. He has well developed leadership skills in the not for profit sector and has been the Chairperson of CERES Community Environment Park for 9 years.

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