New homeowners priced out of the market as supply remains tight

New homeowners are struggling to get into the market, with the issue likely to continue for years to come.

The number of first-home buyers has fallen. Picture: NewsWire / Andrew Henshaw

The number of first-time homeowners fell again in September as rising property prices continue to make it harder for new homeowners to get into the market.

According to figures released by the Australian Bureau of Statistics the number of new owner-occupier first-home-buyer loans fell 3.2 per cent in September to 9,686, although this is still 2.0 per cent higher than at the same time last year.

ABS head of finance statistics Mish Tan said the total value of new housing loans fell 0.3 per cent in September to $30.2 billion following seven consecutive rises. Among the fall were first-home buyers which is down 3.2 per cent in September.

“In September 2024 there were 9,86 loans to first-home buyers across Australia. Victoria made the largest contribution, with 3146 loans, followed by NSW with 2250 and Queensland with 1845,” Dr Tan said.

The falls were led by Queensland fell 9.2 per cent, in NSW fell 3.6 per cent and in Victoria fell 0.4 per cent.

This was offset by spikes of first-home buyers in the ACT, which rose by 18.0 per cent, in South Australia (1.5 per cent,) and in Western Australia (0.5 per cent).

The number of first-home buyers has fallen. Picture: NewsWire / Andrew Henshaw

As the number of first-home buyers struggle to get into the market, national figures from PropTrack show national home prices hit a new record in October, rising 0.26 per cent of the month.

House prices are now 5.62 per cent higher than this time last year.

REA Group senior economist Eleanor Creagh said it was clear housing demand is defying persistent affordability constraints.

“July’s tax cuts have boosted borrowing capacities and buyers’ budgets, which has supported growth. The persistent rise in home values has also motivated many to overcome affordability challenges and transact,” she said.

“Though home price growth regained speed in October, elevated interest rates and affordability constraints are weighing. Buyers now have more properties to choose from, and uncertainty around the timing of interest rate cuts remains.

The extreme housing shortage means prices are unlikely to fall

Despite affordability constraints, it is unlikely house prices will fall, as wave of international puts a floor on property prices.

According to AMP Capital chief economist Shane Oliver Australia needed to build around 250,000 new homes to keep up with demand, but it only reached 176,000. This was in part due to home builders struggling with rising costs of material and labour, as well as higher mortgage prices depressing new home sales.

Australia needs to build 250,000 more homes to keep up with demand. Picture: NewsWire / Andrew Henshaw

“Government forecasts for a sharp fall in immigration and hence population growth point to some easing in underlying housing demand over the year ahead, but so far it looks like immigration levels are coming in stronger than forecast,” he said.

Mr Oliver said, the accumulated shortfall of dwellings in Australia is estimated to be around 200,000 dwellings at least.

But if the decline in the average number of people per household seen in the pandemic years is sustained then the accumulated shortfall could be around 300,000 dwellings.

The Albanese Government has previously set an ambitious national target of building 1.2 million new, well‑located homes by the end of the decade to help first-home buyers get into the market.

However, Australia has never built more than 223,000 homes in a single 12-month period and would need to average 240,000 a year to complete this goal.