Home loan values record strong yearly growth: ABS

New housing lending values have increased 17.9 per cent since March 2023 to $27.6 billion following a 3.1 per cent rise in the month, according to Lending Indicators data from the Australian Bureau of Statistics (ABS).

These latest figures followed a rebound in mortgage values of 1.9 per cent in February 2024 after two consecutive months of declines in December (4.1 per cent) and January (3.9 per cent).

The ABS reported that owner-occupier housing (excluding first home buyers) rose 2.8 per cent to $17.5 billion, 11.4 per cent higher compared to March 2023, while investor housing rose 3.8 per cent to $10.2 billion, 31.1 per cent higher than a year ago.

Mish Tan, ABS head of finance statistics, said: “The value of new loan commitments is a product of the size of loans being approved and the volume of loans.

“The rise in the value of new home loans over the past year reflected increases in the average loan size, in line with rising house prices over the same period.”

Indeed, the latest Home Value Index (HVI) released by CoreLogic showed that home values continued to trend higher during April, rising by 0.6 per cent, with housing values up 11.1 per cent since the January trough in 2023.

Tan further said the “relatively strong growth” in investor loans, which increased both in number by around 11 per cent, and average loan size, which grew by around 8 per cent in original terms.

“This aligns with historically low vacancy rates over the same period, and CPI rental prices rising 7.8 per cent annually to March quarter 2024,” she said.

Commonwealth Bank of Australia (CBA) economist Stephen Wu echoed this, stating that new housing lending to investors reached 37.4 per cent of total lending during the month.

“This is the highest share since June 2017, but below the peak reached just after APRA and ASIC announced measures to slow the rate of investor credit growth in late 2014,” Wu said.

Furthermore, the number of new loan commitments for owner-occupier first home buyers grew 4.5 per cent at the national level to 9,918 after a 5.4 per cent rise in February, up 9.9 per cent year on year.

The value of external financing, however, decreased in March 2024 (seasonally adjusted) by 2.5 per cent to $16 billion, 24.9 per cent lower than the same period last year.

External refinancing values for owner-occupier housing fell 3.1 per cent to $10.3 billion (annual drop of 27.8 per cent) and investor housing fell 1.4 per cent to $5.7 billion, 19 per cent lower than a year ago.

New home building inching towards 20-year lows

On the back of the ABS’ data, Housing Industry Association (HIA) senior economist Tom Devitt said that Australia is now “closing in on the weakest two years of lending for new home building in over two decades.”

Devitt said the number of loans issued for the construction or purchase of new homes remained flat in March with a 0.1 per cent rise, which has left the first three months of 2024 “virtually unchanged” compared to the same quarter last year.

“This means the last 20 months of new home lending has been weaker than any equivalent period since the ABS started this data series in 2002,” Devitt said.

“It is pointing to the weakest year of new house commencements in over a decade at the same time that record population growth is exacerbating Australia’s pre-existing and acute shortage of housing.”

As such, Devitt said that this “reinforces the need to pull other policy levers” in order to lower the costs of construction and finance so that a recovery in new home building is possible.

“Tax reform is needed to bring investors back to the new housing market, especially with respect to the punitive surcharges imposed on foreign investors,” he said.

“Macroprudential rules need to make it easier for gainfully employed Australians to obtain a mortgage.”

Devitt said that while it is still possible that the Australian government will achieve its goal of 1.2 million homes by 2029, a significant lowering of taxes on home building, easing pressures on construction costs, and a reduction of land costs are required.

[RELATED: April price gains ‘on par’ with previous months: CoreLogic]