The Australian Bureau of Statistics’ (ABS) latest Lending Indicators data has revealed that the total value of new loan commitments for housing rose 5.6 per cent to a new record high of $24 billion in November (seasonally adjusted).
The figure represents a 23.7 per cent increase on November 2019.
The value of new owner-occupier home loan commitments also hit a new record in November, rising 5.5 per cent on October figures to $18.3 billion in November.
This is 31.4 per cent higher than in November 2019.
Similarly, the number of owner-occupier first home buyer (FHB) loan commitments reached the highest level since October 2009, rising 3.1 per cent to 13,905 (seasonally adjusted), a 42.5 per cent increase since the start of the year.
Amanda Seneviratne, ABS head of finance and wealth, commented: “Loan commitments for existing dwellings rose 5.9 per cent and were the largest contributor to the rise in November’s owner-occupier housing loan commitments.”
The ABS said the temporary tripling of the First Home Owner Grant, which was part of the federal government’s economic stimulus package in response to the global financial crisis, contributed to similar rapid growth in 2009.
“Other federal and state government incentives and ongoing low interest rates also contributed to the continuing growth in new housing loan commitments,” Ms Seneviratne added.
Looking across the states, the value of owner-occupier home loan commitments rose across the larger states and territories, with commitments in Victoria up 19.6 per cent in seasonally adjusted terms in November 2020, reflecting a rise in housing market activity as COVID-19 restrictions were eased.
Loan commitments for investor housing recorded positive results, rising 6 per cent in November 2020 to reach $5.6 billion.
The number of investor housing loan commitments for first-time buyers accounted for 4.1 per cent of all FHB commitments, in original terms.
Meanwhile, the value of new loan commitments for fixed-term personal finance rose 13.2 per cent in November 2020 in seasonally adjusted terms, which the ABS attributed to increased commitments for vehicles.
Construction loans rising
Ms Seneviratne also noted that the value of construction loan commitments grew 5.6 per cent in November, rising 75 per cent since July.
“This follows the implementation in June of the government’s HomeBuilder grant in response to COVID-19,” Ms Seneviratne said.
According to the ABS data, the number of owner-occupier construction of dwelling rose 7.2 per cent in November 2020, while the value rose by 5.6 per cent to $3.01 billion.
The number of construction loans to owner-occupiers in the three months to November 2020 is 83.7 per cent higher than the same time last year, while the number of loans for land purchase is up by 99.2 per cent compared with the same period in 2019.
Strong detached housing approvals to continue
Commenting on the ABS data, Housing Industry Association (HIA) economist Angela Lillicrap noted that the number of loans for the construction of a new dwelling rose for the sixth consecutive month in November 2020 to reach a new record.
She added that this is the highest result for the second month in a row since the ABS began reporting this data in 2002.
While she acknowledged that the federal government’s HomeBuilder package acted as a catalyst for improving consumer confidence in the housing market, she attributed the strong results to several factors, including low interest rates.
“HIA New Home Sales data suggests that detached housing finance approvals will continue to be strong over the coming months,” Ms Lillicrap said.
“The extension of HomeBuilder at the end of November is not a factor in this month’s result but will see the strength in housing finance data extend into 2021.”
Ms Lillicrap also recognised that it was a strong month for FHBs, with the number of loans to this cohort accounting for 42 per cent of the total number of owner-occupier loans issued in November.
“It is evident in today’s data that HomeBuilder has been successful in boosting confidence in the market and creating work on the ground,” Ms Lillicrap said.
Meanwhile, the value of lending to investors increased by 3.7 per cent for the three months to November 2020 compared with the same time last year, with Ms Lillicrap attributing this to loans for the purchase of existing dwellings.
Across the states, the number of loans to owner-occupiers for the construction of a new dwelling in the three months to November 2020 compared with the same period last year rose the most in Western Australia (144.4 per cent), followed by Queensland (128.0 per cent) and the Northern Territory (127.6 per cent).
Victoria (71.2 per cent), South Australia (53.1 per cent), Tasmania (45.8 per cent) and NSW (43.2 per cent) also recorded positive results, while the ACT recorded a 28.9 per cent rise.
[Related: New loan commitments reach record high: ABS]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.