Almost 20 per cent of new owner-occupier loans went to new home buyers in November 2018 – the highest level since October 2012 –which could put first-time buyers in the driver’s seat.

Owner-occupier loans were approved for 10,493 new home buyers in November 2018, according to the the ABS’s latest housing finance data, accounting for 18.3 per cent of all dwellings financed for the month – a 0.2 per cent increase on the month before.

The resurgence in new home buyers, though, has emerged more as a result of the drop-off in investor activity, than any new-found confidence among first-time buyers – the number of new home buyers actually fell from 11,110 in November 2017 to 10,493 in November 2018 (a 5.8 per cent fall).

But that change in the make-up of the home finance market could have some upside for would-be buyers. First Home Buyers Australia director Taj Singh told The New Daily that the growing importance of new buyers in the housing market could prompt banks to start offering “special deals”.

“Banks are after more owner occupiers, and part of that market is first home buyers,” he said. “Banks will see that [data] and they’ll want a larger portion of the pie, so in the future they may bring out more and more products that attract more first-time home buyers.”

That however would mark a notable change from the current environment, with Mr Singh noting that banks have been steadily phasing out 5 per cent deposit loans, which had previously helped new buyers get into the market.

“There’s less product available for them to choose from,” he said.

“That’s making it harder for first-time buyers to get into the market with the lowest possible deposit.”

Regulators stifling lending

BIS Oxford Economics economist Maree Kilroy said changes to lending criteria introduced by regulator APRA have scared investors out of the market at rates outpacing the drop-off in new home buyers, leading to the stronger showing in the latest ABS data.

“The fall-off in investors has been happening for over 12 months, already the overseas investors have left the market and with house prices falling in our major cities and lower property turnover, investors aren’t seeing an incentive to stay active in the market,” she said.

Those same restrictions are also driving the reduction in low-deposit loans, according to Mr Singh, but there are other factors playing into investors’ reluctance to buy property in the current market.

Mr Singh said uncertainty around what recommendations might be made in the banking royal commission’s final report, due out in February, alongside sliding house prices in most major Australian markets have also tempered demand.