First Home Buyers on the Sidelines, Investors Sharks in the Pool

The clouds keep gathering for punters looking to get a foot on the property ladder, with loans to first home buyers dropping like they’re hot to the lowest level in four years.

The latest figures from mortgage broker AFG show that despite deliciously low interest rates, loans for first home buyers make up just 9.5 per cent of the $3.9 billion in mortgages processed by the company in August.

As you probably suspected, investors are the shark in the pool.

These guys gobbled up a whopping $1.5 billion in loans, indicating they expect the good times to roll on for the Australian property market.

When you break down the latest figures by state, it’s clear that some places are worse than others for first home buyers.

Western Australians are doing OK, with 21 per cent of mortgages going to first timers, although that figure drops significantly in South Australia (9.8 per cent), Victoria (9.4 per cent), and Queensland (5.5 per cent).

But by far the hardest place to stake a claim for property is New South Wales, with only 3.5 per cent of mortgages processed going to first home owners.

And the investors dominating this market are making pretty juicy returns.

According to RP Data, prices in Sydney have risen by 16.2 per cent over the last 12 months, with the median price of properties sold over the last four weeks $676,500 for houses and $565,000 for units.

This compares to 11.1 per cent growth in Melbourne, and 5.4 per cent, 5.9 per cent and 3.5 per cent in Brisbane, Adelaide and Perth respectively.

If all this makes you want to sit on the floor of your rented apartment and cry, don’t despair just yet; there are signs that the heat may be coming out of the property market ever so slightly.

The pace of mortgage growth slowed sharply in August, although it’s not clear whether this is as a result of seasonal factors during the last month of winter, or a broader slowdown on the back of economic exhaustion.

And if you have managed to scrimp and save enough for a deposit then borrowing money is actually super cheap at the moment.

Interest rates are at record lows, which explains why 24.9 per cent of borrowers opted to fix their interest rate last month.

And although the RBA continues to sit on the interest rate sidelines, economists widely expect the next interest rate move to be an increase, which will flow on to home loan rates quicker than you can shout ‘sold!’

Image: David Gallard, via Flickr