Housing finance slips on first buyer drop

The number of new loans approved for owner-occupiers slipped in November, as the proportion of first time purchasers dropped off.

The number of new home loans approved for owner-occupiers was down 0.5 per cent, with 46,199 loans approved, according to the Bureau of Statistics seasonally adjusted estimates.

Loans for the construction of new dwellings eased 1.8 per cent and finance for buying newly built homes dropped 10.3 per cent.

However, loans for buying already established homes rose 0.3 per cent.

The drop in lending was led by a steep fall in the proportion of loans going to first time buyers, which fell from 18.7 per cent in October to 15.8 per cent in November.

TD Securities economist Alvin Pontoh says the ending of the first home owners grant for buyers of established dwelling in New South Wales appears to have dented demand in the nation's biggest housing market.

"State-level data suggest that the ending of a $7,000 first home owner grant in NSW in late September was the main factor, with loans in NSW down -4 per cent in two months," he noted.

"This fiscal withdrawal has been since offset by further RBA easing in October and December." Westpac's economists say the fall in first home buyers is likely to be temporary, as some brought forward their purchase to beat changes to government grants and taxes.

"This was a reversal of an earlier bring-forward, as first home buyers (particularly in NSW) got in ahead of changes to incentives/stamp duty arrangements," the bank's economics team wrote in a note on the data.

"Beyond these timing distortions, the first home buyer market is expected to advance in response to improved housing affordability associated with lower interest rates." While first time buyers may have dropped out for now, Westpac says there was a strong 4.5 per cent rise in loans to upgraders.

Analysts also note that a 3.3 per cent decline in finance to property investors has only partly dented a 15.5 per cent gain over the past year.

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