First-home buying falls as government help dries up

The number of first-time home buyers is falling after the government phased out incentive measures.

Research by the Sydney Morning Herald found that the number of new home loans issued in November dropped by 5.6 per cent after the first home owners’ grant was cut at the end of October from $7,000 to $3,500 for existing houses.

In all, first-home buyers’ share of new loans fell to 22 per cent, from 26 per cent in October.

The remaining $3,500 boost was removed at the end of December and the newspaper predicted a continuing slump in first-home buying as a result.

Savanth Sebastian, an economist at the market analyst CommSec, told the Australian Associated Press this week that the Reserve Bank is likely to raise interest rates in February for the fourth consecutive month – a prediction that may encourage borrowers to compare home loans as Aussies struggle to secure home financing.

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