Australia first-home buyer demand falls as borrowing power shrinks

First-home buyer activity in Australia has declined significantly, with mortgage demand from first-time buyers dropping 20.1 per cent nationally in the year leading to August. Queensland experienced the most substantial decrease, recording a 22.6 per cent fall.

Rising property prices and reduced borrowing capacity are primary drivers of the decline. Canstar estimates that recent rate changes have lowered maximum borrowing capacity by approximately $35,800 for single average-income earners and $71,600 for couples.

The downturn is particularly pronounced among younger demographics; mortgage demand for 18 to 25-year-olds fell 21.7 per cent, while the 26 to 35 age group saw an 18.1 per cent decline. Research suggests shifting priorities among younger Australians, with some choosing travel or lifestyle flexibility over saving for property deposits.