South Australia first home buyer and investor numbers fall

South Australia first home buyer numbers continue to fall with underlying activity from this group remaining subdued.

Latest ABS data reports that 497 first home buyer loans were approved over August, which was a reduction of 4.6 percent over the 521 approved over July.  The August total was the lowest since May and well below the 557 approved over August last year.

3,945 first home buyer loans have been approved over the first 8 months of this year in South Australia compared to 4,872 over the same period last year.  This is a steep fall of 927 or 18.3 percent.

Although first home buyer lending activity fell, the average South Australia loan for this group increased by 6.1 percent over August to $276,500 and was 13.6 percent higher than the $243,300 reported over August last year.

Lending to first home buyers in South Australia accounted for 12.7 percent of all residential lending excluding home loan refinancing over August.  This was an increase on the 12.0 percent market share recorded over July and the highest market share reported since September 2014. First home buyer loan market share remains below the long term average 14.5 percent although the gap is narrowing.

South Australia also recorded a sharp fall in investor lending over August with the value of loans approved to this group down from $429.9m to $406.6m, a decrease of 5.4 percent.  The value of investor lending in South Australia over the first 8 months of this year however remains 14.8 percent higher than that recorded over the same period in 2014.

Investor activity over August accounted for 37.7 percent of all residential lending over the month, which is the lowest market share recorded since February 2014.

All states again recorded sharp decreases in investor lending over the month following similar declines the previous month.  Action by banks to increase interest rates to investors at the direction of the regulatory authorities is clearly having an impact on investor activity nationally.

The ABS reported that the value of finance approved in South Australia for owner occupier dwellings excluding refinancing was also down over August, falling by 4.6 percent to $671.8m.

The value of finance approved for total dwellings excluding refinancing in South Australia fell by 4.9 percent over the month to $1.1bn, the lowest result recorded since February. Home lending over the first 8 months of this year however remains 7.3 percent higher than the value financed over the same period last year although recent signs are for a weakening in growth.

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson