In: Lending News

As the new First Home Loan Deposit Scheme debuts in Australia, New Zealand property experts discuss housing affordability issues. For more on this, don’t miss our monthly Trans-Tasman update on all things lending and property.

Australia: What’s hindering first-home buyers?

According to recent figures from the Australian Bureau of Statistics, lending to first-home buyers dipped by 0.9 per cent in November 2019, but overall first-home buyer activity remains strong.

As a probable effect of cash rate cuts, tax cuts and the easing of lending restrictions, during the three months to November, the number of first-home buyers’ mortgages was 7.3 per cent higher than the year before.

Now, the Australian government hopes to give the market a boost with its newly launched First Home Loan Deposit Scheme, which kicked off on 1 January 2020.

The scheme allows eligible Australians to buy a property with as little as five per cent deposit, without the need to take out lenders’ mortgage insurance. The new benefit can be used in conjunction with other grants, schemes, concessions and waivers, like First Home Owner Grants.

In other news, the HIA’s Housing Affordability Index recorded declines in Melbourne, Sydney, Hobart and Canberra during the last three months of 2019. According to the association, however, servicing a mortgage isn’t the most pressing concern for first-home buyers.

HIA chief economist Tim Reardon said: “The sticking point facing the current generation of aspiring home buyers is obtaining a mortgage in the first place – this relates to the lengthening of the time it takes to save a deposit – and then meeting the increasingly stringent requirements of lenders.”

New Zealand: Property experts discuss affordability issues

According to the Reserve Bank of NZ’s latest residential mortgage data, New Zealand first-home buyer activity was strong in December and accounted for 18.5 per cent of the total $6.5 billion borrowed.

Having said that, the current picture is still one of “severe unaffordability”.

The 16th Annual Demographia International Housing Affordability Survey has ranked all eight markets in New Zealand as severely unaffordable, blaming inflated land prices due to planning restrictions for it.

In contrast to this view, economist Nick Goodall from CoreLogic claims that – thanks to lower interest rates – affordability has actually improved from three years ago, including the amount of income borrowers have to put towards mortgage repayments.

As for property prices, it’s not easy to foresee how the market will be performing in the coming months, let alone make long-term predictions. Infometrics’ chief forecaster Gareth Kiernan tentatively shared his thoughts last month, warning not to take another ten-year house price boom for granted.

“Given the current balance of risks around the market’s drivers, and the historic norms of house price growth, the next ten years shape as a more subdued period for the property market,” Kiernan wrote.

Prices may well grow, but not as fast as they have been over the past two decades: “The increase might not be much – I’d pick a lift of no more than 10 per cent – but it’s still an increase.”

First-home buyers urged not to give up

Once again, our recommendation to aspiring buyers on both sides of the Tasman is to not give up. If the home ownership goal is on their to-do list, no matter how out of reach it may seem, talking to a mortgage adviser can help aspiring first-home owners understand their options.

Our Mortgage Link advisers have been helping thousands of New Zealanders get on the property ladder, and will continue to do so with passion, integrity and expertise.


To get in touch with the team at Mortgage Link, please contact:

Josh Bronkhorst
[email protected]
021 835 506


Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.