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Rising house prices and low interest rates are driving a shift in vehicle buying behaviour, according to data.
Research group IBISWorld said that Australians are shifting from used to new vehicles due to the availability of low interest rates and their ability to unlock equity in their home.
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Finance volumes for new cars and station wagons increased by 3.1 per cent between June 2013 and June 2014, according to IBISWorld.
During that same period, finance volumes for used cars and station wagons fell 4.1 per cent.
IBISWorld said the shift was happening despite the fact that most households are trying to reduce their debt.
"Rising house prices have enabled many mortgage holders to refinance and release more of the equity in their homes," IBISWorld said.
"This has encouraged households to spend on one-off big-ticket items, such as new cars, despite broader concerns about incomes and cash flow.
"It may seem incongruous for consumers to make such purchases while being budget-conscious with day-to-day expenditure, but the fact that funds are readily available when refinancing – and at attractive interest rates – is motivation enough for many."
However, while new vehicles represent an increasing share of the market, new car sales are actually falling, according to the most recent Australian Bureau of Statistics data.
There were 91,869 new motor vehicle sales in November – down 3.8 per cent on the previous year.
NSW increased its vehicle sales by 0.3 per cent, but the other states and territories posted declines.
[Related: New revenue streams from vehicle and equipment finance]
