First-home Buyers Buoy Market - Howe

First-home buyers returned to the housing market in February to take advantage of lower home-mortgage rates, the Deputy Prime Minister, Mr Howe, said yesterday.

Citing confidential reports from three of Australia's biggest lending institutions, Mr Howe said all reported sharp increases in lending to first-home buyers last month. He said one lender reported that its February loans were double its previous best.

Mr Howe said the reports confirmed that a housing recovery was under way. There had been encouraging growth in new housing approvals in January, and economists estimate that homes are now more affordable than at any time in three years.

He urged home buyers to ``shop around for a loan". He also said the Government's forecast of 137,000 new homes started in the 1991-92 financial year would be met.

The executive director of the Australian Bankers Association, Mr Alan Cullen, was sceptical about the reports. ``Our information to date doesn't confirm that. There's certainly been an improvement, but nothing like that sort of quantum leap." Two key bodies in the housing industry said a housing recovery was on its way. Australia's biggest home lender, the Commonwealth Bank, said in December that housing was less expensive than at any time since June 1988, and rates have come down further since.

The Commonwealth said average house prices rose about 3.5 per cent in the second half of 1991, and were likely to keep increasing faster than inflation.

But it cautioned that there was unlikely to be a repeat of the 1988 boom when median prices rose by 70 per cent in one year in Sydney, by more than 50 per cent in Perth, and by 35 per cent in Melbourne.

BIS-Shrapnel, the housing-industry analysts, said housing activity was being held back by the low level of consumer confidence.

Its director of building services, Mr Robert Mellor, said home approvals in the first half of 1992 would be higher than in the same period last year, and that confidence would have returned by mid-year.