ABS lending data reveals slump in first home buyer activity


The number of first home buyers taking out new home loans has dropped to its lowest level in eight months according to lending indicators released by the Australian Bureau Statistics (ABS) on Tuesday.

The ABS revealed that 13,869 first home buyers (a seasonally adjusted figure) took out home loans in the month of June, which is 1,181 fewer than in May. 

Since peaking at the start of the year, first home buyer lending has been steadily decreasing, though the difference between the May and June figures represents the biggest monthly drop off in years.

“First home buyer lending fell across all states with the exception of South Australia, the Australian Capital Territory and the Northern Territory,” said ABS head of finance and wealth, Katherine Keenan. 

“The largest fall was seen in Victoria where strength in first-home buyer lending tied to construction activity continued to unwind post-HomeBuilder.”

As the graph below from the ABS shows, first home buyer lending levels remain at historically high levels despite the recent drop off.

Owner occupier first home buyer loan commitments (seasonally adjusted). Source: ABS

More broadly, the value of total lending commitments among all borrowers also fell in June. $32.1 billion worth of new home loans were taken out during the month, which is 1.6% lower than the May figure of $32.5 billion.

As Keenan says, this was largely driven by falls from owner occupiers plus a significant drop off in construction loans.

“The value of new loan commitments for owner-occupier housing fell 2.5 per cent in June 2021. While this was the largest fall since May 2020, owner-occupier commitments remained 76 per cent higher compared to a year ago and 64 per cent higher than pre-COVID levels in February 2020,” she said.

“The largest contribution to the fall in owner-occupier loan commitments was a fall of 17 per cent in the value of loan commitments for the construction of new dwellings. In addition to this, there was no growth in lending for the purchase of existing dwellings.”

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