home loans features
Image – Canva.
  • The rise follows three consecutive months of declines
  • Owner-occupier commitments rose for the first time since May 2021
  • Economist Dr Andrew Wilson says affordability and reimposition of restrictions could reduce activity

Following three consecutive months of falls, the value of new home loan commitments for housing rose to $31.4 billion in November, an increase of 6.3%, according to the Australian Bureau of Statistics (ABS).

According to Katherine Keenan, ABS head of Finance and Wealth, the rise of owner-occupier commitments rose 7.6% – the first since May 2021, and the largest since January 2021.

“Owner-occupier loan commitment increases were strongest in New South Wales, rising 9.6 per cent, and Victoria, rising 9.7 per cent, corresponding with restrictions easing in those states in October and November,” said Ms Keenan.

Nationally, the average loan size for owner occupier dwellings rose to $596,000 – an all-time high. Each state and territory now have record-level loans sizes, with the exception of WA.

Investor market strong

Investor commitments have also rebounded, with the value of new loan commitments rising 3.8% to a record-high of $10.1 billion.

“Investor lending has grown for the past 13 months, and accounted for around one third of the value of new housing loan commitments in November 2021,” explained Ms Keenan.

“The previous investor lending peak in April 2015 accounted for 46 per cent of new housing loan commitments.”

Katherine Keenan, ABS

Increases were at their strongest in New South Wales (up 7.8%), Queensland (5%) and Victoria (3.6%). The only jurisdictions to record decreases were the two territories.

First home buyers commitments rise too

Despite the ending of some grants and rising prices causing greater affordability constraints, loan commitments for first home buyers rose 1.9% in November.

This rise breaks the decline that has been occurring since January 2021. However, the total number of commitments are still 17.4% lower than a year ago.

Victoria had the strongest rise of 12.3% in the number of owner-occupier first home buyer loan commitments.

“The number of these commitments was 6.7 per cent lower than a year ago, after falling from record highs seen earlier in the year.”

New South Wales (2.2%) and Western Australia (1.3%) both saw increases in first home buyer loan commitments, while they fell in Queensland (-1.5%) and South Australia (-4.6%).

Mixed outlook

Dr Andrew is a leading independent property market economist. Image – Twitter

Dr Andrew Wilson, a consultant economist for Bluestone Home Loans noted that the value of home loans seasonally adjusted in November is 27.4% higher than November 2020.,

“National home lending bounced back over November following five consecutive months of falling activity with the easing of severe covid restrictions reactivating housing markets – notably in Melbourne and Sydney,” noted Dr Wilson.

However, he concluded his remarks by noting that concerns such as affordability could reduce commitments over the year.

“Although home lending increased over November, the outlook clearly remains mixed with affordability barriers, the satisfaction of pent-up demand, and uncertainty – and the reimposition of restrictions – regarding the current severe coronavirus outbreak, set to reduce home buying activity over coming months.”

Andrew Wilson, Bluestone Home Loans

Hayden Groves, REIA President, noted that around one third of value of new housing loan commitments during November were for investors.

“Investors are back in force in the market proving once more the resilience of Australia’s private property markets as Australian and the world rides the current weave of Omicron. 

Hayden Groves, REIA President

“It is out hope that 2022 should see a more stable market in line with an expected increase in stock levels for first home buyers owner occupiers and investors alike.”

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