A combination of record low interest rates, a brief dip in house prices and a range of government incentives have driven a surge in mortgage lending to first home buyers.
In the three months to October 31, lending to first home buyers at NAB spiked by 21% against the 12-month average, representing the only growth in the market over this period.
"First home buyers are back in the market at levels we haven't seen for a decade," NAB Executive, Home Ownership, Andy Kerr said.
"Demand has been supported by historically low interest rates and more government support, such as the First Home Loan Deposit Scheme and HomeBuilder.
"A brief pullback in property prices also helped FHBs as the uncertainty of COVID-19 put many plans on ice, with investor demand slowing noticeably."
It comes after CoreLogic released its Quarterly Economic Review yesterday which revealed a 35.1% surge in first home buyers in the year to October.
CoreLogic Head of Research Eliza Owen said: "There are several factors that contributed to this growth in first home buyer activity, including generational trends, monetary and fiscal incentives and lower dwelling values and competition."
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The research from NAB, which was the first bank chosen to support the Federal Government's First Home Loan Deposit Scheme, found that regional areas and outer suburbs are the most in demand among first home buyers, backing up reports of an exodus from the capital cities.
Nationally, regional areas recorded a 44% surge in first home buyer activity, with regional New South Wales the standout with a 57% spike.
The demand for property in regional areas has also started to drive property prices up. The November CoreLogic Home Value Index showed a 5.7% increase in growth in house prices in regional areas compared with capital city growth of 1.1% in the year to date.
Mr Kerr said the trend towards buying in regional areas for lifestyle reasons as a result of the pandemic is likely to continue for some time.
"Flexible working arrangements implemented due to COVID-19 are encouraging many Australians to consider a tree or sea change as easy access to the CBD moves down the priority list.
"Many are seeing the potential of more land and a more relaxed lifestyle with easy access to areas like the Blue Mountains in NSW and Great Ocean Road in Victoria proving very popular."
The growth in first home buyer lending has been nationwide, with Queensland coming out on top. First home buyer activity in the Sunshine State was up 39% over the past three months, closely followed by Western Australia (37%), NSW/ACT (31%), and SA/NT (23%).
Victoria and Tasmania saw much lower levels of first home buyer activity, with just 3% growth. However, the trend towards regional areas remains clear with 30% growth.
|Location||FHB Lending - Growth past 3 months|
|National||21% (Metro: 17%; Regional 44%)|
|NSW/ACT||31% (Metro: 27%; Regional 57%)|
|VIC/TAS||3% (Metro: -4%; Regional 30%)|
|QLD||39% (Metro: 35%; Regional 44%)|
|WA||37% (Metro: 30%; Regional 55%)|
|SA/NT||23% (Metro: 16%; Regional 36%)|
Mr Kerr expects first home buyers to remain very active in the market in 2021 with low interest rates expected for at least the next three years and government incentives to enter the property market.
"We've seen first-hand the value of the First Home Loan Deposit Scheme and the continued strong demand for it.
"We expect this demand to continue well into 2021, especially given the current conditions make buying cheaper than renting for many prospective first-time homeowners."
First home buyer hotspots
New South Wales
- 2127 – including Newington +70%
- 2150 – including Parramatta +66%
- 2174 – including Abbotsbury +157%
- 2560 – including Campbelltown North +48%
- 2570 – including Camden & Oran Park +38%
- 2747 – including Llandilo & Cambridge Park +54%
- 2750 – including Penrith +68%
- 2259 – including Wyong (Central Coast) +111%
- 2287 – including Wallsend (Newcastle) +65%
- 2444 – including Port Macquarie +143%
- 2478 – including Ballina +148%
West of Melbourne CBD
- 3217 – including Armstrong Creek +97%
- 3216 – including Waurn Ponds & Belmont +56%
- 3338 – including Melton South +38%
- 3029 – including Tarneit & Hoppers Crossing +22% (postcode with most lending to FHB in the state)
East of Melbourne CBD
- 3196 – including Chelsea and Edithvale +60%
- 3175 – including Dandenong +50%
- 3174 – including Noble Park +32%
- 3978 – including Clyde +32%
- 3810 – including Pakenham +27%
- 3977 – including Cranbourne +23%
- 4118 – including Browns Plains (Logan City) +106%
- 4209 – including Coomera (Gold Coast) +94%
- 4300 – Greater Springfield (Ipswich) +67% (most lending)
- 4305 – Central Ipswich +93%
- 4306 – including Karrabin (Ipswich) +58%
- 4509 – including North Lakes (Brisbane) +99%
North and west
- 4817 – including Hervey Range and Bohle Plains (Townsville) +64%
- 4825 – including Mount Isa +115%
- 6061 – including Nollamara & Mirrabooka +107%
- 6062 – including Morley +78%
- 6107 – including Cannington +63%
- 6110 – including Huntingdale +91%
- 6112 – including Armadale +63% (most lending)
- 6430 – Kalgoorlie +62%
- 6530 – Geraldton +117%
- 5085 – including Clearview and Enfield +52%
- 5086 – including Oakden and Hillcrest +51% (most lending)
- 5108 – including Salisbury +68%