The Australian Bureau of Statistics’ (ABS) Lending Indicators data for December 2020 has revealed that the total value of new housing loan commitments rose by 8.6 per cent (seasonally adjusted) in December to $26 billion, a 31.2 per cent rise on December 2019.
This has increased from November 2020, when ABS data had revealed a 5.6 per cent rise in the total value of new housing loan commitments to $24 billion (seasonally adjusted).
The value of new owner-occupier home loan commitments rose by 8.7 per cent to $19.9 billion in December 2020, and is 38.9 per cent higher than December 2019.
Furthermore, there was a marked increase in the first home buyer (FHB) segment, with the number of owner-occupier FHB loan commitments surging 9.3 per cent to reach 15,205 (seasonally adjusted), a 56.6 per cent rise since December 2019.
According to the ABS, this is the highest level since June 2009, when there was similar rapid growth as a result of the temporary tripling of the First Home Owner Grant as part of the federal government’s economic support package in response to the global financial crisis.
Across the states and territories, the value of owner-occupier home loan commitments rose, with Victoria taking the lead.
Owner-occupier home loan commitments spiked in Victoria over December, up 20.1 per cent in seasonally adjusted terms after a 19.6 per cent rise in November.
The ABS said this has reflected a revival in housing market activity that began in October as COVID-19 restrictions were eased in Victoria.
Commenting on the figures, ABS head of finance and wealth Amanda Seneviratne said that federal and state government measures such as the HomeBuilder grant, as well as record-low interest rates are supporting ongoing growth in housing loan commitments.
“Loan commitments for existing dwellings accounted for 53 per cent of December’s rise in owner-occupier housing loan commitments, while construction of new dwellings accounted for 32 per cent,” she said.
“The value of construction loan commitments grew 17.1 per cent in December, more than doubling since the June implementation of the HomeBuilder grant.”
Market abuzz with FHB activity
Housing Industry Association (HIA) economist Angela Lillicrap noted that the rise in the number of loans for the construction of a new dwelling in December marked the sixth consecutive monthly increase.
She also said that the number of construction loans to owner-occupiers in the December quarter had doubled since the same time last year, leaving the number of loans in 2020 higher than in 2019 by 36.3 per cent.
“This is the highest monthly result since the ABS began reporting this data in 2002, surpassing the record set in September, October and again in November,” she said.
“Since the announcement of HomeBuilder in June 2020, confidence in the housing market has continued to thrive, aided by low interest rates and house price growth.”
Commenting on FHB activity, Ms Lillicrap said that this cohort had accounted for 43 per cent of the total number of owner-occupier loans issued in December.
“First home buyers are extremely active in the market, taking advantage of HomeBuilder and various other federal and state incentives,” she said.
“The number of loans to first home buyers reached the highest number since 2009, when post-GFC housing stimulus stimulated housing activity.”
Investors have been active in the market too, demonstrated by the ABS figures for the total value of loan commitments for investor housing, which rose 8.2 per cent in December 2020 to reach $6 billion.
Ms Lillicrap said the value of lending to investors was up by 14.1 per cent in the December 2020 quarter compared with the September 2020 quarter, indicating that “investors have also returned to the market”.
“This was driven by loans for the purchase of existing dwellings as investors are not eligible for the HomeBuilder grant,” she said.
Across the states, the number of loans to owner-occupiers for the construction of a new dwelling in the December 2020 quarter compared with the same time last year has more than doubled in Western Australia (+183.0 per cent), the Northern Territory (+149.2 per cent) and Queensland (+143.2 per cent).
Meanwhile Victoria (+79.6 per cent), South Australia (+69.9 per cent), Tasmania (+69.2 per cent) and NSW (+60.2 per cent) also recorded increases in the December quarter, while the ACT recorded a slimmer increase of 43.8 per cent during this period.
“It is evident in today’s data that HomeBuilder has been successful in creating work on the ground and supporting employment in the broader economy,” Ms Lillicrap concluded.
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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.