Total value of ACT first-home buyer loans skyrockets to highest in the nation: ABS

ACT first-home buyers have entered 2020 driven to make their first purchase. According to new ABS figures, the ACT had the highest growth of all states in the total value of new home loans granted to first-home buyers in January.

The data showed that the figure jumped by 84.7 per cent in January compared with the year prior, to $96.6 million.

The total number of first-home buyers who took out home loans in January also increased by 48.3 per cent from the previous year to 215; pushing the average home loan for first-home buyers from $360,690 in January 2019 to $449,302 in January 2020.

Domain senior research analyst Nicola Powell attributed the increase to the federal government’s first-home loan deposit scheme that came into effect on January 1.

Under the scheme, eligible first-home buyers only need to save as little as a 5 per cent deposit for a home loan — making it easier for first-home buyers to get their foot into the market.

“We’ve seen a wave of first-home buyers using the government scheme with that lower deposit which has helped boost up that average loan size,” Dr Powell said.

“And, I think the fact that we’ve seen the average loan size grow so greatly in a year says that we are seeing the lower end of the market grow in price,” she said.

Dr Powell noted that first-home buyers were able to “leverage greater debt because mortgages and credit are cheap at the moment and interest rates are low”. 

She said these buyers can then go to the market with more money in their pocket.

A Canberra resident who was eligible for the government’s first-home loan deposit scheme was Beth Feint, who bought a one-bedroom apartment in Turner for  $365,000 last January, having saved a little over the 5 per cent deposit.

“I think as a first-home buyer the narrative of purchasing property has changed in the last year,” she said.

“I was always under the impression that I would never be able to buy a home, but I think a lot of people have come to the realisation that it’s not as far outside their reach as it was perhaps portrayed thanks to the deposit scheme.”

Ms Feint was also eligible for the ACT government’s first-home buyer concession scheme which came into effect on July 1, 2019.

Under the concession scheme, first-home buyers in the ACT are not required to pay stamp duty on any residential properties as long as their annual household income is less than $160,000.

Dr Powell said the ACT government’s stamp duty abolition was a big incentive for first-home buyers, whereas previously, first-home buyers were “pigeon-holed to certain suburb”.

“We anticipated this to happen because it opens up a number of suburbs for first-home buyers to access because they can now purchase new and established homes [without paying stamp duty],” she said.

The figures also showed that from July 2019 (when stamp duty was abolished) to January 2020, the total value of home loans taken out for first-home buyers in the ACT increased by 37.2 per cent to $623.1 million. 

The number of first-home loans taken out during this period also increased by 15.5 per cent to 1456 loans.

While the first-home buyer concession scheme is only available to ACT residents, there are similar benefits in neighbouring Queanbeyan, in NSW. 

Vic Srbinovski, of Independent Queanbeyan, said NSW already had existing measures for first-home buyers, where those eligible were exempt from paying stamp duty on all properties valued at less than $650,000, and received a $10,000 grant if purchasing or building a new home.

Mr Srbinovski noted that ACT first-home buyers looked to Queanbeyan because of the lower price points.

“The entry-level prices in Queanbeyan are lower. So, what’s going to happen is people will broaden their search across the border to purchase if they are priced out Canberra,” Mr Srbinovski said.

Ms Feint said during her home-hunting period, she considered Queanbeyan because it was more affordable, but opted to buy in Canberra for its location.

“Ideally, I would’ve preferred to buy a two-bedroom townhouse, which would have been possible in Queanbeyan within my budget, but I wanted to get my foot in the door as soon as I could and some day, I can upsize,” she said.