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HOME BUYERS
For most Australians, buying a home involves raising a deposit then borrowing a substantial amount of money from a bank or other lending institution which then holds a mortgage on the property. The amount borrowed is influenced by a number of factors including the price of the property, the amount of deposit, the policy of lenders regarding borrowing limits, and the ability of the borrower to repay the loan (which in turn is influenced by household income and housing loan interest rates).
The number of dwellings financed each year grew considerably between 1997-98 and 2003-04, a period of relatively low and stable housing interest rates. In 2004-05, banks and other lending institutions financed 637,000 dwellings for owner occupation, 23,000 fewer than in the previous year, despite continuing low interest rates. While the number of established dwellings financed each year has grown from 348,000 in 1994-95 to 560,000 in 2004-05, the number of new dwellings financed for construction or purchase has declined from 103,000 to 78,000 (graph 8.13). In 2004-05, new dwellings represented 12% of all dwellings financed in Australia. Western Australia had the highest proportion of new dwellings financed (17%) and New south Wales had the lowest (9%).
Established house prices also increased during this period, particularly between 2000-01 and 2003-04, but levelled off in 2004-05 in line with the fall in established home purchases (graph 8.14).
Median established house prices for the June quarter 2005 were highest in Sydney ($499,000), Canberra ($374, 000) and Melbourne ($320,000). Project home prices increased less than established house prices, particularly from 2000-01. Between 2000-01 and 2004-05, project home prices increased by an average of 22%, while established house prices increased by an average of 65%.
Average loan sizes increased along roughly similar lines as house prices between 1994-95 and 2004-05. For most of the period, the average loan size of first home buyers was slightly less than for non-first, or changeover, buyers (graph 8.15). However, in 2004-05, both groups borrowed an average of $210,000. Differences in average loan sizes between states and territories tended to reflect differences in median house prices (table 8.16).
8.16 HOUSING FINANCE FOR OWNER OCCUPATION, HOUSE PRICES AND PROPERTY VALUES
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 | | Units | NSW | Vic. | Qld | SA | WA | Tas. | NT | ACT | Aust. |
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| Dwellings financed - 2004-05 | | | | | | | | | | |
| New dwelling built or purchased(a) | '000 | 16.5 | 21.1 | 15.8 | 6.1 | 14.8 | 1.5 | 0.7 | 0.8 | 77.5 |
| Established dwelling purchased(b) | '000 | 168.4 | 124.9 | 121.2 | 47.9 | 73.9 | 11.3 | 5.9 | 6.3 | 559.7 |
| All dwellings financed | '000 | 185.0 | 146.0 | 137.0 | 54.0 | 88.6 | 12.8 | 6.6 | 7.1 | 637.2 |
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| Average loan size - 2004-05 | | | | | | | | | | |
| First home buyers(c) | $'000 | 259 | 205 | 202 | 165 | 169 | 148 | 159 | 224 | 210 |
| Non-first home buyers | $'000 | 254 | 207 | 207 | 154 | 171 | 144 | 179 | 230 | 210 |
| All dwellings financed | $'000 | 255 | 207 | 206 | 155 | 171 | 145 | 175 | 229 | 210 |
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Change in Project Home Price Index(d)(e)
from 1994-95 to 2004-05 | % | 47 | 49 | 52 | 50 | 63 | 58 | 54 | 48 | 52 |
Change in Established House Price Index(d)(f)
from 1994-95 to 2004-05 | % | 132 | 140 | 116 | 117 | 98 | 52 | 54 | 98 | 123 |
Median price of established house transfers(d)(g) -
June Qtr 2005 | $'000 | 499 | 320 | 310 | 270 | 300 | 250 | 260 | 374 | n.a. |
Median estimated value of all owner occupied
dwellings(h) - 2003-04 | | | | | | | | | | |
| Capital city | $'000 | 500 | 300 | 300 | 240 | 250 | 200 | 236 | 359 | 340 |
| Balance of state | $'000 | 280 | 190 | 205 | 160 | 180 | 150 | n.a. | n.a. | 210 |
| Total state | $'000 | 400 | 270 | 270 | 220 | 240 | 171 | 230 | 359 | 300 |
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Average amount of mortgage outstanding(i) -
2003-04 | | | | | | | | | | |
| Capital city | $'000 | 178 | 126 | 120 | 95 | 114 | 82 | 139 | 145 | 136 |
| Balance of state | $'000 | 101 | 84 | 106 | 75 | 91 | 62 | n.a. | n.a. | 96 |
| Total state | $'000 | 150 | 115 | 113 | 90 | 108 | 72 | 135 | 145 | 122 |
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(a) A new dwelling is one that has been completed within twelve months of the lodgement of a loan application, and the borrower will be the first occupant.
(b) An established dwelling is one that has been completed for twelve months or more prior to the lodgement of a loan application, or that has been previously occupied.
(c) Persons entering the home ownership market for the first time.
(d) Weighted average of eight capital cities.
(e) Measures change in the cost of building a new house on buyer's own land.
(f) Measures change in prices paid for house and land, including new house/land packages.
(g) Prices paid for established houses (including land) purchased in the reference period.
(h) Householder's own estimate of the market value of their dwelling at the time of the survey.
(i) Only includes owners with a mortgage. |
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| Source: Housing Finance, Australia (5609.0); House Price Indexes: Eight Capital Cities (6416.0); Housing Occupancy and Costs, Australia 2003-04 (4130.0.55.001). |
Between 1994–95 and 2003–04, the average real disposable income of home buyers who were lone persons under 35 years increased by 18%. That of couple-only households with a reference person under 35 years increased by 21%, and couples with dependent children by 23% (graph 8.17). In the same period, the average loan size, after adjustment for inflation, increased by 64% .
Almost 1.2 million Australian households bought a home in the three years prior to the Survey of Income and Housing, conducted during the twelve months ended June 2004. One in three were first home buyers, most of whom were young households with a reference person aged under 35 years (69%) (table 8.18). Less than 10% of recent first home buyer households had a reference person aged 45 years and over. In contrast, more than half (52%) of recent changeover buyer households had a reference person aged 45 years and over.
Changeover buyers are able to use the equity in their previous dwelling as an often substantial deposit on a more expensive 'upgrade'. Many will be able to discharge their mortgage quickly and some may not need to borrow at all. In 2003-04, the estimated median value of dwellings for recent changeover buyers was $310,000 compared with $250,000 for recent first home buyers. While changeover buyers had larger mortgages than first home buyers, the proportion of owners with a mortgage was lower (70% compared with 95%).
Consequently, average weekly housing costs of changeover buyers were lower than for first home buyers - $251 compared with $330. Changeover buyers also spent a smaller proportion of household income on housing than first home buyers - 19% compared with 24%.
8.18 RECENT HOME BUYERS(a), Selected household characteristics - 2003-04
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| | Recent home buyers
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| Units | First home
buyer(b) | Changeover
buyer(c) | All recent
home buyers | All home
owners |
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| Proportion of households with reference person aged | | | | | |
| Under 35 years | % | 68.7 | 18.9 | 35.7 | 14.2 |
| 35-44 years | % | 22.7 | 28.7 | 26.7 | 21.4 |
| 45-54 years | % | 4.6 | 23.1 | 16.9 | 23.2 |
| 55-64 years | % | *2.6 | 14.5 | 10.5 | 17.6 |
| 65 years and over | % | *1.4 | 14.7 | 10.2 | 23.7 |
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| Proportion of households in selected family/household groups | | | | | |
| Lone person | % | 20.8 | 19.1 | 19.7 | 21.7 |
| Couple only | % | 34.5 | 28.8 | 30.7 | 30.1 |
| Couple family with dependent children | % | 30.5 | 39.4 | 36.4 | 25.9 |
| One parent with dependent children | % | 5.0 | 4.4 | 4.6 | 3.8 |
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| Proportion of households that built/purchased a new dwelling(d) | % | 17.4 | 21.1 | 19.9 | . . |
| Estimated median value of dwelling(e) | $'000 | 250 | 310 | 295 | 300 |
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| Proportion of households with a mortgage | % | 94.6 | 69.9 | 78.2 | 35.1 |
| Average amount of mortgage outstanding(f) | $'000 | 164 | 177 | 172 | 122 |
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| Average weekly housing costs | $ | 330 | 251 | 278 | 156 |
| Housing costs as a proportion of income | % | 24 | 19 | 21 | 13 |
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| Estimated number of households(g) | '000 | 394.0 | 774.7 | 1,168.7 | 5,416.7 |
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(a) Households that built or purchased their dwelling in the three years before the survey.
(b) Recent home buyer households in which neither the reference person nor their partner had previously owned a dwelling.
(c) Recent home buyer households in which either the reference person or their partner had previously owned a dwelling.
(d) A dwelling is new if it was built under contract for the current owner or purchased from a builder/developer and the current owners are the first to live in it.
(e) Householder's own estimate of the market value of their dwelling at the time of the survey.
(f) Only includes owners with a mortgage.
(g) Includes all family and household groups. |
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| Source: Housing Occupancy and Costs, Australia, 2003-04 (4130.0.55.001). |
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