Investors are dominating the NSW and Queensland mortgage markets amid a drop in first homebuyer numbers, according to AFG December figures. 

Home loans for investors comprised 46.3% and 35.9% of all AFG home loans arranged in the two states respectively, while loans arranged for first homebuyers collapsed to just 4.2% in NSW and 4.5% in Queensland over the last two months of 2012. In contrast, the average long term share of home loans arranged for first homebuyers is usually between 12% and 15%. 

AFG general manager of sales and operations Mark Hewitt said the disappearance of first homebuyers was largely because first homebuyer grants were withdrawn in both states, except for new housing. 

Hewitt added that confidence remained an issue. “It’s pretty well established that despite strong employment levels, low interest rates and greater savings, many people simply don’t feel sufficiently confident in our economy to buy their first home, upgrade or invest,” he said.

Hewitt urged that more needed to be done to encourage younger people into buying their first home.” “As we enter a new year, the mortgage market is in need of two dynamics: more competition and greater consumer confidence.

"It is still the case that just four institutions account for nearly nine out of every 10 mortgages arranged in Australia. That level of concentration doesn’t serve consumers well,” he said. 

Meanwhile in WA, first homebuyers comprised 23.2% of all new home loans in December, while investors took up 30.5% of mortgages. Hewitt attributed this to strong migration, escalating rents, improving property values and low interest rates encouraging people into the WA property market.