Melbourne first home buyer revival remains on track

A sustained revival of first home buyer activity in Melbourne remains on track reflecting generally solid confidence and steady performance in the local market through most price ranges and buyer types.

Latest ABS data reports that although the number of loans approved for first home buyers in Victoria  fell marginally over July by 0.7 percent , the 2,526 recorded was nonetheless the second highest monthly total for the year so far.

First home buyer loans approved over the first seven months of this year in Victoria remain 6.4 percent higher than the number recorded over the same period last year. Victoria has recorded the strongest year to date comparison growth in first home buyer lending activity of all the states.

The value of loans approved to first home buyers over July accounted for 11.7 percent of all residential lending in Victoria – still well behind the long-term average of 17.4 percent.

The average first home buyer loan approved over July in Victoria was an all-time monthly record of $347,600 – second highest of all the states behind only NSW with an average loan of $402,100.

The current average Victoria first home buyer loan is equivalent to a purchase price of around $435,000 with a 20 percent deposit which together with stamp duty would require savings of around $100,000.

Regulator authorities have acted recently to curtail residential investor lending through increases in interest rates to this group. Perhaps it’s time to consider corresponding initiatives to cut interest rates for first home buyers to revive the great Australian dream of home ownership which for many aspirants in Melbourne still remains a nightmare.

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson