First homebuyer demand for home loans has collapsed in New South Wales and Queensland, following an overhaul of both states’ grant systems. 

Mortgage broker AFG claims that last month it arranged just 96 home loans worth $31m for first homebuyers in Queensland, compared with 265 mortgages worth $79m the month before. 

This follows a similar trend in NSW where in both October and November the company arranged fewer than half the 219 home loans worth $83m in September. 

Mark Hewitt, general manager of AFG Sales and Operations said the trend was significant. “This [is] very concerning for the market going forward. First homebuyers are the lifeblood of the property market – when activity stagnates at the entry level, it affects everyone up the property chain.” 

State governments in both NSW and QLD have withdrawn $7,000 first homebuyers’ grants in the past two months. 

The proportion of the company’s home loans arranged for first homebuyers has slumped in Queensland from levels around 15% in the months leading up to the end of the first home buyers grant, to just 5.5%. 

In New South Wales, first homebuyers comprised 13% of new home loans up till September, dropping to 5.7% in October and 5.4% in November.