The number of dwelling commitments fell more than expected in November, according to official data, with the number of loans down 5.6% on a seasonally adjusted basis. The value of loans, however, only fell 1.6 per cent.

The soft result was forecast by analysts who pointed to rising interest rates and a reduction of stimulus measures as reasons for the decline. Indeed, first home buyers, the key sector behind last year’s strong property market, represented the primary cause of the decline as the Boost to the First Home Owners Grant had been wound back the month prior.

The number of first home buyer commitments, as a percentage of the total, decreased from 26.0 per cent in October to 22.0 per cent in November. While investors, who are less sensitive to rate movements, began to pick up the slack.

David Airey, President of the Real Estate Institute of Australia, said the news did not come as a shock – although economist expectations of a two per cent fall had fallen short.

“This is exactly what the REIA said would happen as the First Home Owners Grant Boost (FHOG Boost) was phased out and the Reserve Bank of Australia (RBA) began its series of interest rate increases,” he noted.

“First home owners have come down from a high of 28.5 per cent in May to the lowest since October 2008 when the Boost was introduced, with more decreases expected as the effects of the cessation of the Boost in December are realised.”

The news is considered unlikely to stop the Reserve Bank of Australia hiking once more next month, although a low inflation reading later this month could see that opinion change. Credit markets are currently pricing in a better than 60% chance of a 0.25 per cent increase on the back of recent strong approvals, retail and jobs data.