First-home buyers are back. Banks and other lenders shelled out almost $20 billion in new home lending in November, as a record number of Australians signed up for loans.
The Bureau of Statistics said 30 per cent more first-home buyers entered the market in November than a year earlier, borrowing a record $2.5 billion.
After seasonal adjustment, the bureau said a record 36,800 borrowers took out loans in November to buy an existing house, flat or unit.
Owner-occupiers are moving in as housing investors move out. With prices flat, rents low and the sharemarket booming, investors took just 30 per cent of home lending in November, down from 40 per cent in 2003.
Westpac economist Andrew Hanlan said that with fewer investors buying, prices had stabilised, allowing first-home buyers their opportunity.
"Improving affordability has encouraged first-home buyers back into the market," he said. "If investors remain on the sidelines, then it is more likely that property prices will continue to consolidate."
But Commonwealth Bank economist Joseph Capurso warned that the lending boom could see the Reserve Bank soon lift interest rates again.
The fact that credit was still growing strongly would worry the Reserve, he said. "Households' willingness to borrow is one reason the RBA will retain its tightening bias. We have pencilled in a 25-basis-point rate rise in the June quarter."
The lending boom confirms auction data from the Real Estate Institute of Victoria data. It shows the number of houses sold at auction in Melbourne jumped 17 per cent year-on-year in the December quarter.
While the number of houses offered rose just 8 per cent, clearance rates jumped from 61.6 per cent in 2004 to 66.6 per cent last year.
REIV chief executive Enzo Raimondo welcomed the record lending to owner-occupiers. "This is certainly positive news for the Victorian real estate market," he said. "While investors have left the market, owner-occupiers have definitely been more active."
Lending to investors is about $2 billion a month below its 2003 peak, but remains strong at a seasonally adjusted $5.5 billion in November.
New home construction is the other area of the market that remains subdued. The bureau estimates both the number of new-home buyers and the amounts lent are trending down.
Even so, total home lending in November was a near-record $19.6 billion, and the fifth highest after seasonal adjustment.
The average level of housing loans to owner-occupiers rose 4.4 per cent in the year to November, to $225,500.
Non-bank lender Resi Mortgage Corp warned buyers yesterday that with prices unlikely to rise significantly for some time, they should be wary of taking out interest-only loans.
Resi's national manager for consumer advocacy, Lisa Montgomery, said buyers should pay off some principal, rather than rely on rising prices for equity.
