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WA investor loans hit 5-year peak

The value of housing loans to investors in Western Australia reached $452 million in April, the highest monthly commitment in the past five years, but a new report has forecast the segment will continue rising.

A report on WA’s economic progress in the June quarter by the Bankwest Curtin Economics Centre (BCEC) has noted the spike in local investor loans during April, which surged by 164 per cent year-on-year.

The value of housing loans to investors across Australia had faced a smaller but still substantial yearly increase of 63 per cent over the same period, with $8 billion committed nationally over April 2021.

However, overall housing finance commitments for WA were down in April by 6.2 per cent from the month before, for the first time since the rollout of the HomeBuilder and Building Bonus government grants.

Loan commitments devoted to the construction of new dwellings fell by 35 per cent from March to April, to $488 million. But the fall had come after loans for new dwellings maintained monthly highs of more than $700 million for each of the four months.

Loan commitments for most other purposes (newly erected dwellings, existing dwellings, residential land) suffered double-digit declines over April, apart from loans for alterations and additions, which were up by 36 per cent.

The data has indicated that huge demand for finance following the government stimulus packages, such as HomeBuilder, has begun to subside, BCEC stated, taking some of the heat off the WA housing market.

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“However, the strong demand for loans among investors, as well as the persistently high demand for existing dwellings, provide signs of encouragement that the growth in housing investment activity in WA will continue into the latter half of the year,” the report said.

Dwelling constructions approved in WA over April rose by 118 per cent on the same period last year, exceeding the national monthly year-on-year growth of 47 per cent.

There were nearly 11,000 dwellings approved between January and April, a noticeable increase from the 4,800 that were approved for the first four months of 2020.

Other states had also seen rises but failed to match the rate of WA, the report stated. Queensland approvals rose by at least 60 per cent in each of the three months to April, compared with the year before. NSW on the other hand saw a 74 per cent more approvals in April, compared with a year prior.

The number of dwelling approvals peaked in February, with 2,921 total – the highest figure for a single month’s approvals in WA in the last seven years.

BCEC noted the impact of stimulus measures such as HomeBuilder and Building Bonus in WA, which drove a “huge boost to demand for new housing”. The initiatives are expected to continue translating into higher construction activity for the coming months.

Meanwhile, Perth’s housing prices increased by 2.9 per cent over the quarter to December, the largest growth rate for the last seven years. The change was comparable to other capital cities, including Adelaide (2.6 per cent), Brisbane (2.7 per cent) and Sydney (3 per cent).

“It is anticipated that the trend will continue in 2021 as mortgage interest rates and housing supply both remain low,” the report stated.

The median price of established house transfers in Perth was $522,000 for the December quarter, the highest in four years.

The median house price of established dwellings in Perth had increased by $27,000 in one quarter, a growth rate of 3 per cent for the city’s established house price index. But it was below the national growth rate of 5.2 per cent.

Meanwhile, the median price for an existing house in regional WA was $375,000, $75,000 more relative to the September quarter.

[Related: Loan commitments continue record streak]

Find out more about the top property and home buying trends in your local area at the Better Business Summit 2021. Places are limited, so make sure you secure your place at the five-state event asap!

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