Victorian first home buyers rise and rise

First home buyer numbers in Victoria continue to increase with activity set to keep rising as recent strong Melbourne prices growth moderates and the local economy improves.

Latest ABS data reports that the number of first home buyer loans approved in Victoria surged over November to the highest total recorded since September 2013.  2702 were recorded which was 5.9 percent higher than the 2551 approved over the previous month.

First home buyer activity over the first 11 months of 2015 was 5.2 percent higher or 4127 more than that recorded over the same period in 2014.

Although Victoria first home buyer numbers are surging, the residential loan market share over November at 12.7 percent remains well below the local long-term average for this group of 17.3 percent.

Higher numbers of Victorian first home buyers have translated into a new record high average loan for this group over November at $357,800. This is an increase of 10.3 percent over the average loan recorded over November 2014 the year before.

The prospects for continued growth in Victorian first home buyer numbers remain positive with recent strong prices growth in Melbourne now fading. Continued high levels of outer suburban new home construction in Melbourne is also a positive for first home buyers who continue to favour this dwelling type assisted by the local first home buyer grant of $10,000 for new homes.

First home buyers will also continue to benefit from a strengthening local economy with latest ABS data revealing that the Victorian seasonally adjusted unemployment rate fell to 5.9 percent over December – well below the 6.4 reported over December the year before. Victoria also added 44,894 jobs over the year.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson