First home buyers surge back into the market: Hotspots revealed

author-avatar By on December 15, 2020
First home buyers surge back into the market: Hotspots revealed

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."

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

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

Greater Sydney

  • 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%

Outside Sydney

  • 2259 – including Wyong (Central Coast) +111%
  • 2287 – including Wallsend (Newcastle) +65%
  • 2444 – including Port Macquarie +143%
  • 2478 – including Ballina +148%

Victoria

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%

Queensland

South-east

  • 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%

Western Australia

Perth

  • 6061 – including Nollamara & Mirrabooka +107%
  • 6062 – including Morley +78%
  • 6107 – including Cannington +63%
  • 6110 – including Huntingdale +91%
  • 6112 – including Armadale +63% (most lending)

Regional

  • 6430 – Kalgoorlie +62%
  • 6530 – Geraldton +117%

South Australia

Adelaide

  • 5085 – including Clearview and Enfield +52%
  • 5086 – including Oakden and Hillcrest +51% (most lending)
  • 5108 – including Salisbury +68%

Photo by Erda Estremera on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

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