Investor mortgage lending has seen its biggest drop in two years, according to September housing finance data, as investors head for the hills following continued pressure from Australia's regulator and falling house prices in Sydney.
First-home buyers provide the silver lining in the Bureau of Statistics figures, with the group seeing an opportunity amid the shifting market dynamics and generous stamp duty concessions in NSW and Victoria.
Mortgage lending to investors slumped 6.2 per cent in September, compared with the previous month, while lending to owner-occupiers dropped 2.1 per cent, according to Thursday's ABS release. The monthly total of new mortgage commitments fell to $32.5 billion from $33.7 billion in August.
Not helping investor sentiment is news Sydney house prices have begun falling and Melbourne growth is easing.
But first-home buyers continue to pin their ears back and wade in as the departure of investor interest provides more room to move.
The number of first-home buyer mortgage commitments as a percentage of total owner occupiers edged 0.2 per cent higher to 17.4 per cent in September - a 4.5 year high.
And the first-home buyer segment has been busily sniffing out bargains, the data show, as they aim to remain below stamp duty concession cut-offs.
The average loan size for first-home buyers during the period fell $6200 to $315,200, while the average loan size for all owner-occupied housing commitments rose $2100 to $371,700.
"A window has opened up," AMP Capital chief economist and head of investment Shane Oliver told Domain.
"NSW and Victoria have both introduced more attractive stamp duty concessions for first-home buyers ??? that's the big factor. At the same time, there are fewer investors out there, which has made more room for the first-home buyers."
The increase in first-home buyer activity doesn't come without a warning, according to Dr Oliver.
"There's always the danger these first-home buyers are getting in at the top - just when the investors are nicking off. The first-home buyers could come in and end up holding the parcel, so to speak. But if they're picking up cheaper properties, at the lower end of the market, it probably offsets that risk a little bit."
The Australian Prudential Regulation Authority's move to tighten investor and interest-only lending rules in March of this year appear to be biting, colliding with easing property prices to present a double-whammy for multiple-property owners.
"APRA's macroprudential policy, aimed at investors and interest-only loans in particular, appears to be having the desired effect of taking some investor demand out of the market," ANZ economist Daniel Gradwell said.
"While household debt is still growing faster than income, developments such as this allow the regulator and RBA to be patient."
Tuesday's Reserve Bank meeting saw the board keep the official cash rate on hold at 1.5 per cent for a 14th-straight month, with hopes of a cooling property market pinned to the regulator and eyes on weak consumer sentiment.