First home buyers were supposed to rush in once the Budget levelled the field. Instead, it looks like they’re running for the exits and the numbers show why.
This is a weird one, but economics can be exactly that, with Aussie Home Loans data indicating that first homebuyers have deserted the property market. This is at odds with Prime Minister Albanese’s claim that first-time buyers right around the country are buying their first home.
Of course, it’s early days with the Budget only a tick over six weeks old, but the early signs are that auction clearance rates are at historical lows, and house prices are falling, with Sydney and Melbourne prices down 3.7% and 4% respectively since recent highs.
This has been caused by the Budget’s tax changes, three interest rate rises from the RBA and the confidence slump since those two significant actions.
This is how AMP’s chief economist, Shane Oliver, summed it up: “So far, the property downturn has taken price growth and auction clearance rates to around the low end of the range they have been in for the last 20 years, so it looks like just another cyclical correction after a strong period. But there’s a way to go yet!
“This is a cyclical pullback reacting to falling demand but there’s also a structural change to the market in a sense, because investors have been chased out of the existing home market because negative gearing is no longer available. Also, the 50% capital gains discount has been taken away.”
While the headline today might be that first homebuyers aren’t hurtling into the property market, that could change when the headline is house prices slump and Australian property owners have lost billions! As homes become less valuable, first homebuyers might come back to buy, and a lot of sellers could have negative equity and a lot of mortgage stress!
Back to today’s headlines and as The Australian reports:
“One of the country’s largest mortgage brokers says the number of prospective first-home buyers applying for loans has plummeted by 20 per cent since Jim Chalmers unveiled his controversial budget, raising questions about Labor’s goal of using the negative gearing and capital gains changes to get young Australians on to the property ladder.”
That’s the story from Aussie Home Loans, which nowadays is owned by Lendi Group. It says:
- First-home buyer lodgements declined more than 20% since Labor unveiled the tax changes in the budget.
- The decline in applications for a loan from investors was 25%.
- The causes for this decline were a “combination of three things: uncertainty on new budget settings, affordability and borrowing power after recent rate rises, and exhaustion from the ever-changing macro environment.”
Coalition leader Angus Taylor, who needs an issue to rescue his failing position in his own party, told The Australian that the mortgage figures exposed “another Labor lie”.
This is what he said to The Australian: “Labor has delivered the housing trifecta of failure: fewer homes, higher rents and confidence in the market smashed”.
To be objective, The Australian did find individual mortgage brokers who have seen no change or slight improvements in first homebuyer loan applications, but none were reporting an avalanche of inquiries.
While first homebuyers eventually will line up for home loans in bigger numbers for properties in the low- to middle priced range, uncertainty about jobs in an AI-threatening labour market could be spooking some potential first-time buyers.
Others will be waiting for lower interest rates and, importantly, falling house prices, which will be something existing homeowners might remember when the PM or his successor goes to the polls in 2028.
Economics can be a zero-sum game, that is, when you create new winners like first home buyers, you create losers like people who thought the value of their home had made them wealthier beyond their dreams.
For some, that dream could become an unexpected nightmare.
The market is still too ridiculously expensive relative to average, or even above average, incomes
So potential home buyers may well be waiting for decent price falls which are long overdue in this country’s crazy property market. Otherwise my 3 adult sons won’t be able to move out of my house until the age of 30.
Decades of government neglect, mismanagement and selfish vested interests have created this country’s mess.
Can you blame would be first home buyers when they are looking at the prospect of negative equity in their first home?
It remains to be seen for the competition of buying a first home. Don’t forget Labor’s controversial immigration policy to prop up the economy. They may even snap up the cheaper properties
The issue is one of supply not redistribution of wealth
But we need more tradies, relaxed planning laws to free up more land and of course reduction in the various materials’ taxes.
Builders having been stating for sometime now it is expensive to build a home today and public are reluctant to pay the high prices.
Tax tax tax – that’s all these governments want for the burgeoning Canberra bubble and their welfare programs eg a blowing out NDIS.
Peter, when I first came to Strayla in the late 80’s, I fell in love with the place. It was a fair, down to earth society where everyone seemed to get a fair go.
Fast forward to 2026 my God the place has changed.
When I was here in the 80’s homelessness was almost entirely absent except for a few black fellahs that seemed to prefer living in the outdoors anyway.
Today, not more than 2KM’s from our house, there are dozens of people sleeping out under the stars, or in their cars.
We had to run away from one of the major cities a few years ago, it was just getting too crowded & the infrastructure was 20 years behind where it needed to be.
I’m not going to complain about Strayla, it’s still the best country in the world, that’s why I settled here.
But I am going to complain about the government, it’s gotten too big, the over-reach is what’s taking the shine off this place, they want to have their noses in everything and tax you for the pleasure.
Aussie’s need to actively be putting their money beyond the reach of these clowns, as the great man Kerry Packer once said “I am not evading tax in any way, shape or form. Now of course I am minimising my tax and if anybody in this country doesn’t minimise their tax they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra’
Cheers & happy Friday.
Does not matter which Party the story remains the same. The more Politicians play with the economy with short term political agenda bandaids the greater the economic wound becomes after that new bandaid wears away. The same short life as those pay increases without procuctivity gains until the additional cost flows through to prices – or unemployment.
Funny how a 20% drop in loan applications over a few weeks becomes proof the policy has failed, but decades of negative gearing inflating investor demand is somehow ignored. Maybe first-home buyers aren’t “running for the exits”—maybe they’re waiting for prices to become more affordable. That’s kind of the point.
Mark…..I tend to agree with your reasoning , except for the FACT that all the clamour for
the “removal of those nasty investors unfairly competing using ‘negative gearing’ ” has now been achieved by legislation [ as I understand it !? ] and with the impediments removed the previously complaining “hard done by” are NOT rushing in to stake their long-overdue-claim to anything …………….but are still airing their grievances !
You optimistically add : “maybe they’re waiting for prices to become more affordable”
What pray-tell is ‘affordable’ in your opinion ? And WHEN if ever will THAT occur ?
Honestly , even IF [ highly unlikely though it is !!! ] this ‘complaining contingent of clamouring clowns’ was GIVEN A HOUSE they would object to the rates , the price of water and electricity , the location , the cost of maintenance , the colour scheme , the neighbours AND a myriad of other real or imaginary reasons why it was a “poisoned chalice ” , a ‘ disadvantaged , compromised and unacceptable offer ‘ !!
Australia has already DONE THAT for a large portion of it’s ungrateful population , had it all trashed and made uninhabitable …..and look how well that went ! Still unhappy , complaining and ‘holding out the hand’ for further contributions !
What makes you THINK or EXPECT anything different this time ???
Some people are NEVER SATISFIED !