{"id":832080,"date":"2026-07-29T21:46:16","date_gmt":"2026-07-29T21:46:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/832080\/"},"modified":"2026-07-29T21:46:16","modified_gmt":"2026-07-29T21:46:16","slug":"australia-property-first-home-buyers-drop-out-of-property-market-as-interest-rates-rise-and-sentiment-cools","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/832080\/","title":{"rendered":"Australia property: First home buyers drop out of property market as interest rates rise and sentiment cools"},"content":{"rendered":"

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The number of first home buyers looking to take out a home loan has fallen in a year even as property prices soften in some parts of the country<\/a> and investors exit the market.<\/p>\n

First home buyer demand nationally rose at the end of 2025 and in early 2026, before dropping back in April, data from credit data company Equifax shows. By last month, mortgage demand from new home buyers was down almost 20 per cent compared with the same time in 2025.<\/p>\n<\/p>\n

Higher interest rates<\/a>, concerns over buying in a falling market<\/a>, property-related budget reforms and a lack of supply have led to reduced demand from first home hopefuls, experts say. Confidence has also dipped among this cohort, with some now holding back as they wait for property prices to reach a floor.<\/p>\n

According to Equifax, demand for mortgages from first home buyers jumped by 13.7 per cent in October compared with the year prior. This was bettered only by a 17.1 per cent spike year-on-year in December.<\/p>\n

Equifax chief solutions officer Kevin James said its data tracks the number of loan inquiries made where an applicant has never had a mortgage, to determine demand. More first home buyers, he said, looked to enter the market in the second half of 2025 in part due to the October expansion of the Australian Government 5% Deposit Scheme<\/a>.<\/p>\n

\u201cWe saw the first home buyers come in \u2026 and we saw some real positive stories come out of that<\/a>,\u201d he said.<\/p>\n

\"FirstFirst home buyer mortgage demand jumped after the federal government expanded the 5 per cent deposit scheme.James Brickwood<\/p>\n

But by April this year, Equifax data showed demand for first home loans down 2.9 per cent on the same time in 2025. In May, demand was 13.4 per cent lower, and there was a 17.2 per cent year-on-year drop in June.<\/p>\n

Three rate hikes over 2026 and serviceability challenges had prompted first home buyers to hang back, James said, but now many were also taking a wait-and-see approach, expecting prices to soften as investor demand slows.<\/p>\n

\u201cI think people are just waiting to see what\u2019s going to actually happen with interest rates and with pricing,\u201d he said.<\/p>\n

Cost-of-living pressures, rate hikes and weak consumer sentiment were helping to constrain activity<\/a> generally, but Dr Nicola Powell, Domain\u2019s chief residential economist, said first home buyers were also facing deposit hurdles and borrowing limits, with some now more cautious.<\/p>\n<\/p>\n

\u201cThat caution is driven by the fact that prices overall are falling \u2026they don\u2019t want to buy on a Friday to find out their home is worth less than on a Monday,\u201d she said. Sydney and Melbourne fell more than 3 per cent last quarter.<\/p>\n

\u201cIt means that they\u2019re perhaps feeling apprehensive about buying in a falling market because they obviously don\u2019t want to get into negative equity. But then it also drives this other thought process that, \u2018if I wait a bit longer, I might be able to get greater value for money\u2019.\u201d<\/p>\n

Domain was expecting minor price falls nationally, with deeper falls in Sydney, Melbourne and Canberra, while banks were tipping further falls of about 5 to 10 per cent nationally.<\/a><\/p>\n

Related Article\"Property<\/a><\/p>\n

Jack Elliott, national first home buyer specialist at Alcove Mortgages, highlighted low confidence and a reduction in buying capacity due to higher interest rates. Still, some first-timers were making preparations for the upcoming spring selling season<\/a>, with inquiries ticking up.<\/p>\n

\u201cNaturally, winter is always a little bit slower. You\u2019ve got fewer listings, fewer buyers, with fewer properties to purchase,\u201d he said, adding clients reported less competition from investors now.<\/p>\n

Indeed, investors started to exit the property market after the federal budget in May introduced negative-gearing and capital-gains tax concessions reforms.<\/p>\n

According to preliminary Equifax data, there was a 9.8 per cent reduction in demand year-on-year in May from investors, or those with two or more mortgages. By June, there was a 12.7 per cent drop compared with the same time the previous year.<\/p>\n

\u201cI think people are actually seeing some of the investor market softening,\u201d James said.<\/p>\n

\"ThereThere is less demand from property investors for mortgages.James Brockwood<\/p>\n

Enosh Tampoe, a mortgage and finance advisor at Smartmove, agreed there were fewer investors in the market now. But there were also fewer listings as some investors held on to their properties due to grandfathering of negative-gearing arrangements.<\/p>\n

\u201cIf you\u2019re a first home buyer who\u2019s actively looking, you can potentially get one for a good deal there, which a few of my clients have been able to do. But then, in saying that as well, they have obviously a lot less to pick from, given their supply has dropped significantly.\u201d<\/p>\n

Related Article\"Home<\/a><\/p>\n

KPMG urban economist Terry Rawnsley said while first home buyers were sitting on the sidelines, so were investors.<\/p>\n

\u201cWhen you\u2019ve seen the investor activity drop off historically, you see house-price-values growth cool, which is an opportunity for first-time buyers to get into the market,\u201d he said.<\/p>\n

\u201cBut I think, just given levels of uncertainty at the moment, probably \u2026 the next six months, everyone\u2019s going to be sort of sitting on their hands, waiting to see what happens with prices, interest rates, and the broader economy.\u201d<\/p>\n

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\"AliceAlice Uribe<\/a> is the deputy property editor at The Sydney Morning Herald and The Age.Connect via email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Save You have reached your maximum number of saved items. Remove items from your saved list to add…\n","protected":false},"author":2,"featured_media":832081,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-832080","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/832080","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=832080"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/832080\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/832081"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=832080"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=832080"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=832080"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}