However as ANZ’s head of Australian economics, David Plank, points out, it is unusual that it hasn’t been higher interest rates putting the brake on things.
Indeed, house prices started rolling over early last year, while mortgage rates have barely moved in that time.
In the 2009 slump, average mortgage rates peaked at well over 9 per cent. In 2012 they nearly reached 8 per cent — the graph below inverts the mortgage rate to align them with house prices.
House price have further to fall: ANZ
The ANZ sees prices falling through this year and next before stabilising in 2020.
“Across the capital cities we see Sydney and Melbourne facing the greatest drops across 2018 and 2019 — in the order of 10 per cent,” Mr Plank said.
Mr Plank sees the current fall in residential property prices as a result of a steadily evolving credit crunch.
It started as a macro-prudential twist of the thumbscrews applied by the Australian Prudential Regulation Authority to the banks, who then put the squeeze on investors.
The banking royal commission’s investigation of lax, and sometimes straight-out-fraudulent lending has tightened housing credit further.
“This impacts Sydney and Melbourne the most, given their stretched affordability and leverage metrics and their greater number of investors,” Mr Plank said.
The other interesting phenomenon is the average size of first-home buyers’ mortgages continues to rise despite the tougher lending conditions being applied.
So why are first home buyers borrowing more?
However, as the Reserve Bank has noted, most households don’t tend to max out their home loans. The current data supports this idea.
“While there has been a small reduction in the average owner-occupied loan size in the past few months, the average loan size for first home buyers is growing,” Mr Plank said.
“Given that first home buyers are likely to have less equity than upgraders, the fact that their loan size is still growing highlights that the credit tightening is very focused on investors.”
If the reduction in borrowing capacity is targeting investors, rather than broadly across the market and all borrowers, the doomsday scenarios of a massive property price crash being currently floated may be well off the money.
First home buyers are likely to keep stepping in the void created by investors and at least partially fill the gap, slowing the rate of the price fall.
Markets lack direction
Wall Street had an up-and-down week, mostly down, and ended flat on Friday’s session.
European stocks were more decisive — they fell on the back of a larger-then-expected deficit underpinning the new government’s budget.
The ASX was one of the better-performing markets for the week, despite gaining just 0.2 per cent. Futures trading points to a payback on Monday.
Oil rose again as US President Donald Trump’s supply-throttling sanctions against Iran appeared to have a greater impact than his tweets demanding a lower price.
RBA on hold, retail going nowhere too
After a couple of lean weeks, the diary makes for a more interesting time coming up.
That said, the RBA meeting on Tuesday will be the same old story — a hold at 1.5 per cent for the umpteenth time. Is anyone still keeping count?
However, the commentary may be a bit brighter after stronger-than-expected second-quarter growth and some key employment figures hinting conditions could be about to improve on the wages front, but don’t hold your breath.
CoreData’s home price index (Monday) should confirm the 12th consecutive month of falling property prices.
Building approvals (Wednesday) tend to be volatile. They fell 5 per cent in July and the consensus call is another, more-modest retreat.
While monthly numbers are tricky to pick, the overall trend is lower, albeit off high levels of activity.
The exporters are likely to continue their rollicking good time with August likely to produce the 8th straight trade surplus this year (Thursday).
The most important figures for the week are likely to be retail sales (Friday).
Sales growth was non-existent in July. There’s unlikely to be much of an improvement this time around.
New data released by the WA Government shows 2789 loans were approved last financial year, with first homeowners comprising 85% of Keystart applicants in the period.
Of those, 2169 loans were for new builds or newly constructed homes.
Since the initiative started in 1989, more than 66,700 Keystart loans have been approved.
Housing Minister Peter Tinley says WA’s protracted market downturn meant that property was now the most affordable it has been in six years.
“At a time when the housing construction sector is flat and banks are tightening their lending criteria – partly as a result of the Royal Commission – Keystart has a crucial role in creating jobs and stimulating the economy,” Tinley says.
“Unlike most major lenders, Keystart reduces the barriers to get a home loan, with deposits starting from as low as two per cent and no requirement for lenders’ mortgage insurance. This can save clients between $8000 and $10,000.
“Keystart is the most successful scheme of its kind in Australia. It allows people to stop renting and take that important step towards home ownership.”
Access to Keystart is not limited to first homebuyers and low income earners. Eligible singles living in the metropolitan area can earn up to $90,000 a year, couples $115,000 and families up to $135,000. The earning limits are higher in regional WA.
In December, the WA Government boosted Keystart’s loan book by more than $420 million to help stimulate greater demand in the housing market.
What is the First Home Owners Grant?
The First Home Owners Grant (FHOG) in Australia is designed to encourage and assist home ownership across the country, and for eligible borrowers it’s a great start to life as a property owner. The grant differs in each state and territory and in most places it applies to new homes only.
Here’s a breakdown of what is available to help you on your way towards raising your deposit.
- New South Wales
- Queensland
- Northern Territory
- ACT
- Western Australia
- Tasmania
- Victoria
From 1 July 2017, the NSW government announced several reforms to improve affordability for first home buyers. Chief among these are:
- A $10,000 First Home Owner Grant for builders of new homes up to $750,000, and for purchases of new homes up to $600,000
- No stamp duty for all homes up to $650,000
- Stamp duty reductions on homes up to $800,000
- No insurance duty on lender’s mortgage insurance
You must live in the home you buy for at least 6 months in the first year of owning the property in order to receive the grant (unless you work in the Australian Defence Force).
You may also be eligible for an exemption from transfer duty if you buy a new home valued up to $550,000, or vacant land up to $350,000. You can get a concession on the transfer duty for new homes valued between $550,000 and $650,000, or vacant land valued between $350,000 and $450,000.
Find out more here. You can preview the current home loans available on the market for first home buyers in New South Wales, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
Queensland used to take our prize for the grant with the best name, but sadly, the Great Start Grant has been renamed to the Queensland First Home Owners’ Grant from 1 July 2016.
This grant offers $20,000 for eligible first home buyers who are buying or building a new home up to the value of $750,000 – including off-the-plan homes. This amount applied to all building or purchasing contracts signed between 1 July 2016 and 31 December 2017; for contracts signed after this period, the Grant amount reverted back to the original $15,000.
Find out more about eligibility conditions here. You can preview the current home loans available on the market for first home buyers in Queensland, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
In the top end, the Northern Territory offers several generous incentives to first home buyers:
- A First Home Owner Grant of a whopping $26,000 for first home buyers buying or building a new home or an established home (from 24 May 2016). No purchase price limit applies to new homes bought after 1 January 2015.
- A First Home Owner Discount on stamp duty of up to $23 928.60, for first home buyers purchasing an established home valued up to $650,000.
- A Home Renovation Grant of up to $10,000 for eligible recipients of the above First Home Owner Discount.
- A Household Goods Grant of up to $2,000 for purchase of household goods, granted to eligible recipients of the First Home Owner Grant.
Find out more here. You can preview the current home loans available on the market for first home buyers in Northern Territory, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
In the west, eligible first home buyers can receive a First Home Owner Grant of up to $10,000 for buying or building a new home. Homes south of the 26th parallel (i.e. all of the Perth metropolitan area) can have a purchase price of up to $750,000, whereas homes located north of the 26th parallel can be valued up to $1 million.
On 27 December 2016, the Government announced a temporary $5,000 boost to the FHOG, for a total of $15,000. Eligible first home buyers who entered into a contract between 1 January and 30 June 2017 to purchase or construct a new home received this boost.
Eligible first home buyers can also apply for the Home Buyers Assistance Account, which is a grant of up to $2,000 to cover the incidental expenses of purchasing an established or partially built home through a licensed real estate agent. It is available for properties with a purchase price of up to $400,000.
Find out more here. You can preview the current home loans available on the market for first home buyers in Western Australia, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
On offer in SA is a $15,000 grant for new residential dwellings only, up to the value of $575,000. You must live in the property for at least 6 months in the first year of owning it to be eligible for the grant.
If you are buying an off-the-plan apartment that meets the required criteria, you may also be eligible for an Off-the-plan Concession on stamp duty, which is capped at $21,330.
South Australia also has grants of up to $7,000 for established homes, depending on the area and buyer. Read the terms and conditions to figure out which one is right for you.
Find out more here. You can preview the current home loans available on the market for first home buyers in South Australia, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
https://www.youtube.com/watch?v=5nOIh6q_iE0
Source: RevenueSA
Victoria offers a grant of up to $20,000 for first home buyers buying a new home in regional Victoria, or up to $10,000 for homes in cities. The maximum purchase price of eligible new homes is $750,000.
In addition, first home buyers may be eligible for various concessions on their stamp duty:
- Both new homes and established homes are eligible for a first home buyer duty reduction of up to 50% if the home is valued at $600,000 or less.
- New and established homes valued up to $550,000 are eligible for a principal place of residence (PPR) concession if you intend to live there as your primary home.
- First home buyers with a family (at least one dependent child) may be eligible for a duty concession on a property valued at up to $200,000.
- Off-the-plan properties and refurbished lots are eligible for an off-the-plan duty concession.
- Young farmers buying their first farmland property are eligible for the young farmer’s exemption or concession.
Find out more here. You can preview the current home loans available on the market for first home buyers in Victoria, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
| Company | ||
|---|---|---|
 |
Owner Occ P&I Limited Time Offer – $700 Cashback 200-749k | Variable |
|
 |
Low Rate Home Loan with Offset P&I 80% | Variable |
|
 |
Home Value – Owner Occupier PI | Variable |
|
 |
Discount Offer O/O P&I +$200k | Variable |
|
 |
Discount Variable Package Rate (LVR <80%) | Variable |
|
ACT
As of 1 January 2017, homes in our national capital are offered a $7,000 First Home Owner Grant, down from $10,000 in 2016. This applies to first home buyers of new, substantially renovated, or off-the-plan properties valued at up to $750,000. You must live in the property for at least 1 year within the first year of owning it.
ACT first home buyers may also be eligible to defer payment of duty, if they are also eligible for the First Home Owner Grant.
Find out more here. You can preview the current home loans available on the market for first home buyers in ACT, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
In the Apple Isle, from 1 January 2016 to 30 June 2018, the First Home Owner Grant was $20,000 for buying a new home, “spec” home, off-the-plan home, or owner/builder home. After 30 June 2018, the grant was meant to revert to being just a $10,000 payment but the Tasmanian state government extended the $20,000 grant in the 2018-19 State Budget.
Find out more here. You can preview the current home loans available on the market for first home buyers in Tasmania, for a variable loan amount of $500,000 in the table below. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).
A final tip on the First Home Owners Grant
Grants and concessions on stamp duty have a tendency to change, sometimes without a lot of notice. Keep up to date with what’s available in your state and thoroughly double-check eligibility requirements before you buy. Asking questions now could save you from tears later!
Compare how mortgage products from different institutions measure up across Australia with our latest First Home Buyer Award report or compare home loans for First Home Buyers on our website.
Get an idea of how much you can borrow via our easy-to-use Home Loan Borrowing Power Calculator, or get started comparing home loans for first home buyers: