Housing Market Entry Gets Tougher! First-Time Buyers in Australia Drop Again in September – Sydney Auction Clearance Rate at 59%

Week’s Key Focus

As housing prices rise, it’s becoming increasingly difficult for new buyers to enter the market. Data from the Australian Bureau of Statistics (ABS) shows that the number of new owner-occupier first-home buyer loans fell by 3.2% in September to 9,686, though this remains 2.0% higher than the same period last year. Mish Tan, ABS Head of Finance Statistics, noted that after seven consecutive months of increases, the total value of new home loans slightly declined by 0.3% in September to AUD 30.2 billion, with first-home buyer loans seeing a decrease.

In September 2024, a total of 9,686 first-home buyer loans were approved nationwide, with Victoria contributing the most at 3,146 loans, followed by New South Wales with 2,250 loans and Queensland with 1,845 loans. The decrease in first-home buyers was primarily seen in Queensland (-9.2%), New South Wales (-3.6%), and Victoria (-0.4%). However, the ACT saw an 18.0% increase in first-home buyers, and South Australia (1.5%) and Western Australia (0.5%) also experienced growth, reflecting varying market conditions across regions.

Despite pressures on first-home buyers, national property prices reached a record high in October, with a month-on-month increase of 0.26% and a year-on-year rise of 5.62%. REA Group senior economist Eleanor Creagh stated that housing demand remains strong, with prices unlikely to decrease due to persistent housing shortages.

AMP Capital Chief Economist Shane Oliver indicated that Australia needs to build around 250,000 new homes annually to meet demand, but actual construction currently stands at 176,000 units, due largely to rising material and labor costs and high mortgage rates, which are suppressing new home sales. Oliver added that Australia’s cumulative housing shortfall is estimated to exceed 200,000 homes. While the Albanese government has set an ambitious target of 1.2 million new homes over the next five years, achieving an annual build rate of 240,000 units remains a significant challenge for the industry. However, meeting this target could greatly alleviate housing pressures and create more buying opportunities for first-home buyers.

Auction Results Last Week

Sydney: 1,407 properties went to auction, with results reported for 890 auctions. A total of 525 properties were sold, resulting in a clearance rate of 59%. The total auction value was AUD 594,749,253, with a median house price of AUD 1,614,000.
Melbourne: 603 properties went to auction, with results reported for 393 auctions. A total of 249 properties were sold, resulting in a clearance rate of 63%. The total auction value was AUD 166,895,500, with a median house price of AUD 780,000.