Housing turnover and first home buyers

Posted on 10 June 2010

The RBA in its latest Bulletin wrote a short analysis of the recent impact of first home buyers on the housing market (here). Following on from the update on housing finance, thought these charts were interesting:

Go figure, the younger you are, the more likely you’ll have a mortgage. It is clear from this which demographic will be wearing the brunt of rising capital costs. Maybe the government should have made it clear that the various grants were actually designed to assist the home building and real estate industries – not necessarily the young couple with stars in their eyes.

And then how these purchases have been financed:

Loan to valuation ratios have been creeping higher for first home buyers even as house prices as house prices have escalated over the last decade. The authors go on to point out that turnover in ‘less expensive’ neighborhoods was particularly strong as the government support for first home buyers kicked in. And that house prices in these ‘less expensive’ neighborhoods has started to soften even as the post grant price surge got under way.

Finally, the following is a chart of housing market indicators which shows the more recent disconnect between housing loan approvals, auction clearance rates and house price growth. While the RBA points out that this is partly a reflection of the withdrawal from the market of first home buyers, it doesn’t then go on to say who has stepped into the shoes.