The latest Property Pulse analysis from property research analysts CoreLogic reveals that in December 2016, the two major states accounted for a combined 69.5 per cent of all housing finance commitments that month, a "historic high".
Nearly 42 per cent of home loans were for properties in NSW, while 27.7 per cent were for homes in Victoria.
As a comparison, the report shows that in June 2012 — when the current property growth phase commenced — the two states accounted for just over 60 per cent of mortgages.
In total, more than $24 billion of the $34.7 billion of Australian mortgages in December 2016 were for properties in NSW and Victoria, largely driven by property in Sydney and Melbourne.
Overall, the value of mortgage lending across each state and territory was recorded at: $14.5 billion in NSW, $9.6 billion in Vic, $5.1 billion in Qld, $2.7 billion in WA, $1.6 billion in SA, $0.7 billion in ACT, $0.3 billion in Tas, and $0.2 billion in NT.
The value of owner-occupied mortgages have almost doubled in NSW and Victoria since June 2012, rising from $4.3 billion to $7.7 billion in NSW and from $3.9 billion to $6.0 billion in Victoria.
Around half ($6.8 billion) of all mortgages in NSW were for investors in December 2016, the largest proportion of any state.
When combined, NSW and Victoria held more than three quarters (76.3 per cent) of investor mortgage finance nationally in December 2016, which CoreLogic head of research Cameron Kusher said was “the largest share on record”.
He commented: “The current housing market growth phase has really been all about Sydney and Melbourne. We’ve seen dwelling value growth increase substantially higher in Sydney and Melbourne than in any other of the capitals.
“The rise in values has been supported by low interest rates and availability of mortgage finance however, other factors such as localised economic performance, population growth and foreign demand have driven the much stronger growth in Sydney and Melbourne than across the other capital cities."
He added: “With the demand focused so much on NSW and Victoria, it’s not surprising values in Sydney and Melbourne have increased so much more than in the other capital cities.
“While steps have been implemented to cool mortgage demand, particularly from investors in Sydney and Melbourne, the data points to the fact that demand is unquestionably, very strong.”
Mr Kusher concluded by saying that, with interest rates remaining at close-to-historic lows, “further changes” will be required in order to slow mortgage demand and dampen the increases in dwelling values being experienced in Sydney and Melbourne.