New loan commitments for first home buyers fall sharply in latest ABS figures

The dream of owning your own home has motivated millions to save over generations, but the latest data on new loans for first home buyers suggests many Aussies are giving up.

New loan commitments for first home buyers fell sharply in the month of December, in the latest sign that more Australians are giving up on the dream of owning their own home as house prices continue to rise to new heights.

The total number of first homebuyer loan commitments hit 9491 Australia-wide in December, a sharp 8.4 per cent fall from November.

The value of first homebuyer loans also fell 5.5 per cent to hit $4.8bn.

Though December registered a sharp drop, 2023 in total registered 12.9 per cent growth in the number of first homebuyer loans.

Some states also bucked December’s gloomy figures for first homebuyers, with South Australia recording a 2.6 per cent uptick in the number of new loans.

Tasmania and the Northern Territory recorded growth rates above five per cent.

More and more first home buyers are struggling to enter the housing market with the ABS showing a 8.4 per cent fall in new loan commitments for the demographic in December 2023. Picture: Supplied

But loans collapsed in Queensland, with the Sunshine State recording a substantial 14.1 per cent decline.

Victoria and NSW both recorded 3.7 per cent falls.

Master Builders Australia CEO Denita Wawn said the December decline meant first home buyers now accounted for less than one third of housing loans.

“During 2023, first home buyers struggled against the backdrop of larger than expected interest rate increases as well as resurgent house price growth,” she said.

“Strong rental price growth has also eaten into their financial capacity and slowed down the process of saving for a home purchase deposit.”

The total value of new loan commitments fell 4.1 per cent in the month, with owner-occupier loans falling 5.6 per cent and investors sliding 1.3 per cent.

Ms Wawn said December’s figures revealed the “demand side” of the market was beginning to struggle.

“Poor sentiment among owner occupiers resulted in the number of loans for newly built homes declining by 4.9 per cent while existing home loans suffered an 8.2 per cent reduction,” she said on Friday.

“The figures for December highlight the fact that the demand side of the new home building market is struggling at the same time as obstacles on the supply side persist.

“The pipeline for new homes is shrinking and not showing assurances that people are able to build new homes.”

The peak body CEO noted input costs in the building sector continued to strain supply.

“Having stabilised during the September 2023 quarter, there were hopes that building materials costs might have fallen during the December 2023 quarter,” the organisation stated.

“The 0.3 per cent increase which occurred during the last three months of 2023 is an unwelcome result and means that building materials are over one third more expensive (33.5 per cent) than before the pandemic.

“Combined with continued labour supply pressures, the resumption of building materials price rises is likely to frustrate efforts to expand the stock of new homes.”

House prices continue to rise across much of Australia in early 2024, with data from CoreLogic showing a 0.4 per cent rise in January.

The median price of a home in Australia now sits at $759,000.

Master Builders said December’s “weak” set of lending figures added to the case for an RBA interest rate cut “as soon as possible.”

Originally published as New loan commitments for first home buyers fall sharply in latest ABS figures