In early 2015, the Reserve Bank of Australia (RBA) and the Australian Prudential Regulatory Authority (APRA) commenced ‘jawboning’ the major banks to moderate their lending practices in a bias towards first home-buyers. Jawboning is the practice of a powerful regulator advising its clients of impending action should they not act in accordance with the public and verbal advice. Since then, the bias has been working, with first home owners increasing their share of the national loan book to 11.4% of the total in June 2015, up sharply from 10.8% the prior month.
As the chart shows, first home-buyers make up a small proportion of total borrowings in any one period. That is understandable, after all, you can only have a first time once.
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While the first home-buyer’s share of credit has grown modestly (it has been higher on numerous occasions in the last five years), they have done so with only a modest increase in their average expenditure on housing. Many seem to have resisted the prices element of the boom.
In June 2015, the average loan for a first home-buyer was AUD340,200, up just AUD7,000 (2.1%) from the prior month. A year before, in June 2014, the average was AUD321,900. The year-on-year increase in the average price paid for a dwelling by first home-buyers is a relatively modest 5.7% over the period.
Although it fluctuates more than value, the number of dwellings purchased by first home-buyers has also grown. It was at its mid-term peak in December of 2014 when it reached 9,760 dwellings. In June, they accounted for 8,737 new purchases, 6.0% higher than the monthly average over the last five years.
First home-buyers are in the market, with an assertive position and willing bankers by their sides.
All of this feeds into the thinking that suggests the first home-buyers are actively participating in the market and doing so with an emphasis on the affordable, including the mid-rise multi-residential dwellings described in the earlier item in this edition of Statistics Count.
