First home buyers are sitting on the sidelines

Hopes were lost for first home buyers to restore life back to the home loan market, as Australia’s leading financial comparison website  found the proportion of first home buyers ended mortgage season with an eight-and-a-half-year low.

Australian Bureau of Statistics (ABS) Housing Finance figures, released on Monday January 14, 2013, show first home buyers made up 15.8 percent of all home loans financed in November 2012, the lowest level since July 2004.

Spring is traditionally the busiest time of year for the property and mortgage markets however it appears this did not prove enough to offset the changes to government incentives. There were 7921 first home buyer home loans written in November, which was 2051 less than November 2011.

The lower demand followed home buyer incentives for existing properties in several states ending in October and being replaced by bonuses for new properties only.

Michelle Hutchison, Spokesperson for RateCity, said the report follows research by RateCity which found first home buyers are limited to lower-end properties.

“The past year has been tougher for first home buyers and the ABS figures prove that they have serious concerns about entering the market, despite lower interest rates making home loans more affordable.

“The cost of buying a home would be overwhelming for many first home buyers as RateCity found that an average income earner can afford to buy a home worth about $276,000 while the average Australian household is limited to a property worth about $342,000.

“That’s a big difference to average property values, as RP Data shows the eight capital city aggregate median dwelling price is $483,000, almost double the recommended maximum value the average income earner can afford,” said Mrs Hutchison.


Recommended maximum property values based on average incomes

Single adult





























Source:, See notes at the end for methodology

Mrs Hutchison said prospective first home buyers that are in a good position shouldn’t be discouraged from entering the property market this year.

“Don’t let fewer grants and high average costs deter you from buying your first home if the time is right for you. If you have a stable income, have saved a decent deposit and stick to your budget, borrowers could take advantage of the low interest rate environment and slow lending market to save significantly on entering the property market this year.

“Use comparison websites like which can help you calculate how much you can afford to borrow, research the home loan market and compare deals. Lenders are willing to negotiate so don’t be afraid to ask for a discount!”

–        RateCity calculated maximum property values based on:

  • ABS full time adult total weekly earnings (May 2012) and gross household income weighted (2009-10, 2% inflation added per year to 2012)
  • Maximum monthly home loan repayment based on recommended maximum 30% of gross income towards repayments
  • Interest rate based on current average (rounded) of 6% and 2% buffer added (8%)
  • Loan size based on 8% interest rate and maximum monthly repayment
  • Property value based on loan size plus 10% deposit

–        RP Data figures as at December 31, 2012



Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.


Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.

Michael Yardney


Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit

'First home buyers are sitting on the sidelines' have 2 comments

    Michael Yardney

    January 22, 2013 Michael Yardney

    Just click the print button under the article



    January 22, 2013 Philip Day

    Hi Michael,
    Is there any way I can print out any of your Blogs from my laptop ? the information is very informative.


Would you like to share your thoughts?

Your email address will not be published.