By: Staff Reporter
Demand for home loans is sagging as first home buyers increasingly vacate the property market.
Data from the Australian Bureau of Statistics (ABS) found the number of mortgages taken out by owner-occupiers slumped for the fifth consecutive month in February, dropping 1.8 per cent, to be down more than 22 per cent on the June 2009 peak.
First home buyers accounted for the majority of the slide, with loans to aspiring house owners down 43 per cent from a year earlier.
Mortgage Choice chief executive officer Michael Russell said the results indicated that the housing market is “far from recovered”.
“In contrary to what many market commentators are indicating, a decline in the total value and number of housing commitments shows the overheating of property prices is more likely to be based on demand outstripping supply and not the result of a recovered housing market,” Mr Russell said.
Housing Industry Association chief economist Dr Harley Dale agreed and said the recent acceleration in home construction to an annual rate of about 16,000 would be difficult to sustain.
Dr Dale said “very weak” housing finance highlighted the risk that the recovery could begin to wane as early as mid-year, exacerbating the housing shortage.
“There is a clear risk that this shortage worsens because the recovery runs out of steam years ahead of when it needs to. Such an outcome would deliver upward pressure on rents and home values,” he said.
According to the ABS, housing finance commitments dropped 2.1 per cent in February, while owner occupied housing commitments fell 3.1 per cent and investment housing commitments dropped 0.4 per cent.
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