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First home seekers more upbeat on outlook

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July 12, 2017

Young people are becoming more positive about ever owning a home.

Australians are starting to take a more positive view towards buying a home after many months of fretting that the dream of owning a roof over their heads was becoming a nightmare.

While the latest Westpac-Melbourne Institute consumer confidence gauge showed only a modest 0.4 per cent rise in July, its sub-index as to whether now is a good time to buy a dwelling jumped 3.1 per cent, the first significant increase this year.

Recent decisions by state governments to tackle housing affordability, like reducing stamp duty, have been a particular hit with first home buyers.

In releasing the report on Wednesday, Westpac chief economist Bill Evans said it was also a big factor behind a 36 per cent surge among 25-34-year-olds in the "time to buy a dwelling" index.

Data on Tuesday had shown the proportion of first home buyers taking out a mortgage was the highest in two years, while owner-occupier demand for home loans was on the rise as investors shied away from the property market.

However, separate data on Wednesday showed the supply of new homes being built have taken a bit of a jolt.

Poor weather, including Cyclone Debbie, over NSW and Queensland during the first three months of the year saw the commencement of new dwellings reduced to 50,395; an 11.4 per cent drop from the previous quarter and the smallest quarterly amount in almost two years.

Commencements were nearly 20 per cent down from a year earlier.

Commonwealth Bank economist Kristina Clifton expects commencements will average about 206,000 in 2017, down from 230,000 last year.

But she expects such building work will run ahead of demand of about 185,000 this year.

"This should help increase housing affordability at the margin," she said.

However, Mr Evans believes it is too early to call a recovery in confidence in the housing market with retail banks lifting some mortgage rates and overall confidence soft.

The modest rise in confidence in July still indicated that pessimists continue to outnumber optimists.

Confidence was softer among respondents with a higher exposure to investor housing, falling about 10 per cent in the month for those aged over 55, he said.

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