More first home buyers are entering the market than in the past decade


More first home buyers are entering the market than in the past DECADE as it is cheaper than renting – and the boost will keep the economy going for years, bankers claim

  • NAB boss Ross McEwan claims buying often cheaper than renting after deposit
  • Sixteen per cent of the bank’s lending now going to first home buyers
  • Moody’s Investors Service says strong market is good for much of the economy

Australia’s strong housing market is a bonus for banks, developers, and material suppliers, a global credit rating agency says.

Moody’s Investors Service says for banks, robust residential mortgage growth will support their revenues, particularly at a time when low interest rates and intense competition are weighing on net interest margins.

The earnings of developers and building material suppliers are also set to rise thanks to new residential construction and ‘remodeling’, senior Moody’s analyst Saranga Ranasinghe says.

Real estate investment trusts Mirvac and Stockland, and material manufacturers Boral, BlueScope Steeland Infrabuild Australia, all derive a significant portion of earnings or revenue from the residential market.

National Australia Bank chief executive Ross McEwan confirmed there were more first home buyers getting into the market than have been seen in the past five to 10 years

National Australia Bank chief executive Ross McEwan confirmed there were more first home buyers getting into the market than have been seen in the past five to 10 years 

Moody’s analyst Tanya Tang says record-high housing finance approvals and construction approvals for stand-alone houses are being supported by low interest rates, government stimulus and a rebounding economy.

‘Although the government’s HomeBuilder subsidy program has now expired, the extension of the construction deadline will continue to support sector activity for the next year or more,’ she said.

Moody’s drew some comfort that new loans have been largely to owner-occupiers, a segment it views as having a lower credit risk, and a positive for bank asset quality.

‘However, banks have increased higher loan-to-value lending as government incentives have increased demand from first-time homebuyers,’ it says.

National Australia Bank chief executive Ross McEwan confirmed there were more first home buyers getting into the market than have been seen in the past five to 10 years.

‘In our book alone about 16 per cent of new lending is going to first home buyers,’ he told 2GB radio.

‘First home buyers with low interest rates are finding it cheaper to actually buy, as long as they have got a deposit… than it is to rent.’

House prices are surging in middle distance suburbs of Australia's big cities, with one old home at Marsfield in Sydney's north-west surging by $980,000 in five months - or by $49,000 a week to $2.74million. Pictured is the house at 6 Julie Street

House prices are surging in middle distance suburbs of Australia’s big cities, with one old home at Marsfield in Sydney’s north-west surging by $980,000 in five months – or by $49,000 a week to $2.74million. Pictured is the house at 6 Julie Street

He said house prices were rising across Australia with the pandemic showing people could work from home, which was seeing a big trend to moving out of cities.

‘House prices out of the main centres are going up much, much higher than those in the inner city,’ he said.

But he did warn if house price rises keep going, it may see the Reserve Bank and financial regulators stepping into the market and curb activity for investor loans.

‘It’s not expected at the moment,’ he added.

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