NSW first home buyers remain subdued as local grant cut

First home buyers in NSW remain at low levels despite a sharp decline in Sydney prices growth and a looming cut to the local first home buyers grant.

Latest ABS data reports that the number of first home buyer loans approved in NSW fell for the third consecutive month. Just 2168 loans were recorded over November which was 3.6 percent lower than the 2249 approved over the previous month.

First home buyer activity over the first 11 months of 2015 was 4.5 percent below or 1046 fewer than that recorded over the same period in 2014.

NSW is clearly the worst performing state for first home buyers with latest loan activity comprising just 8.9 percent of total residential lending. Next highest was Queensland well ahead with an 11.6 percent loan market share. NSW first home buyer lending remains well below the long-term average for the state of 13.6 percent.

Although first home buyer numbers are falling in NSW, the average loan to this group continues to increase. November’s average loan of $436,500 was yet another new record high and now 20.1 percent higher than that recorded the year before over the same month.

The average first home buyer loan in NSW is clearly the highest of all the states with the next lowest Victoria significantly less at $357,800.

The prospects for a sustained revival of first home buyer numbers in NSW remain problematic although the end to the extraordinary Sydney prices boom of the past three years will certainly provide some relief.

The NSW first home buyer grant however will be reduced from the start of 2016 from $15,000 to $10,000 and still available only to new homes.

First home buyers will continue to benefit from a strong local economy with latest ABS data revealing that the NSW seasonally adjusted unemployment rate remained at just 5.2 percent over December – the lowest rate in nearly three years and clearly the lowest of all the states.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson The Property Show expert 2UE Saturdays 12.30-1pm.