First Home Buyers Hit Five-Year High

They’ve finally muscled their way back in.

Aussie first home buyers are back

Data from the Australian Bureau of Statistics (ABS) shows first home buyers made up 18% of total owner-occupied loans last year.

The last time first home buyers were 18% of the market was back in 2012.

first home buyers Australia

Source: Domain

Push out the old and bring in the young

Why have first home buyers jumped back in?

It’s got little to do with prices. Property values across Australia are still high in comparison to incomes. The cost of owning a home also probably isn’t as cheap as you might think.

The cost of owning a home in Melbourne or Sydney is around 35% of the average household monthly income.

 home repayments Australia


The champion for first home buyers has been APRA (Australian Prudential Regulatory Authority). They’ve told banks to limit interest-only lending and tighten up policies on investor loans.

That’s why banks are now changing many interest-only loans to principal-and-interest. This means the home owner now has to pay off a portion of the original loan plus interest.

Such changes can increase monthly repayments dramatically, sometimes by as much as $1,000.

Those who can’t afford the higher repayments (generally investors) have no other choice but to put the property on the market.

Has APRA gone too far?

Some investors believe APRA has gone too far. As reported by The Australian Financial Review:

Alongside Mr Young and his Property Club members, other prominent investors are also running into trouble due to the banks tightening up their investor lending policies. The Financial Review revealed last week that Sydney investor Nathan Birch was sued by his lender last year after his company defaulted on a mortgage over a Gold Coast investment property.

“APRA has done a lot of damage trying to fix a problem that did not exist,” Mr Young said. He said the changes effectively meant that a typical investor could not own more than two properties and predicted more retirees would have to sell their investments and rely on the age pension.


Härje Ronngard,

Junior Analyst, Markets & Money

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Harje Ronngard is a Junior Analyst at Markets and Money. With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation. It’s not good enough to be right on average when it comes to investing. The market is volatile and it only takes one bad day to ruin your portfolio. You don’t want to end up like the six foot man that drowned in the river that was five foot deep on average. It’s why Harje is constantly reminding investors of their downside risk here at Markets and Money. He does so by simply asking just two questions.  What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Markets and Money readers. Right now Harje is focused on managing research and investments over at the Legacy Portfolio. An investment publication designed to significantly grow investor’s wealth over time with deeply undervalued businesses. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home amongst Matt’s high yielding income plays.

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