ABS Reports a 19% Increase in Property Loans
An economist mentioned that the rise in new loan commitments for housing in June indicates a stabilization of market confidence, even with unchanged interest rates.
The ABS reported a 19.1% rise in total new housing loan commitments to $29.2 billion, with investor housing loan commitments skyrocketing by 30.2% to $11.0 billion.
New loan commitments for owner-occupier housing also increased by 13.2% to $18.2 billion.
In Western Australia, new investor loans surged by 56.7%, followed by increases of 38.3% in South Australia and 34.5% in Queensland. Additionally, New South Wales saw a 27.3% growth in new investor loans, while Victoria experienced a 9.4% increase.
“Over the past year, New South Wales maintained the highest average loan sizes for both owner-occupiers and investors. In June, it reached $780,000 for owner-occupiers and $818,000 for investors,” noted Mish Tan, ABS head of finance statistics.
The number of new owner-occupier first home buyer loans rose by 3.4% during the month, primarily driven by a 6.5% increase in Victoria.
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ABS highlighted that Victoria has had the highest number of first-home buyer loans among all states and territories since June 2017.
Businesses observed a 25.7% increase in new borrower-accepted loan commitments for construction, reaching $2.78 billion, and a 17.5% surge to $6.11 billion for property purchases.
“This suggests that building activity is at, or near, the trough in this cycle,” Tapang mentioned.
Home Building Approvals Remain Low
Although there is a positive trend in loans, Master Builders Australia noted that June marked the worst month for higher density home building approvals since 2012.
“For owner occupiers, new dwellings’ prices are 5.4% higher than a year ago. This is partially due to labor shortages and other cost pressures in the new home building market,” said Shane Garrett, Chief Economist at Master Builders Australia.
“We need a greater volume of new home building in this segment to alleviate rental market pressures.”
Master Builders Australia’s CEO, Denita Wawn, called on the Australian government to facilitate more home construction.
“Whether it’s detached housing or higher density, the same constraints and cost drivers are applicable: workforce shortages, low productivity, insufficient critical infrastructure, high taxes and charges, slow approval processes, and expensive union agreements,” Wawn explained.
“The housing shortage poses challenges in controlling inflation. This places pressure on the Reserve Bank to increase interest rates, leading to higher rental inflation and reduced building activity.”
