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First home buyer loans hit 11-year high

First home buyers continue to surge on volume, with 12,302 first home buyers settling loans in August, equating to the highest monthly figure since October 2009.

This is according to the August 2020 Lending to Households and Business figures released today by the Australian Bureau of Statistics

Housing Industry Association Chief Economist Tim Reardon said the results are evidence of the short-term stimulus from HomeBuilder emerging in the housing finance data.

“This is particularly evident in the issuing of loans for the construction of new homes and in lending to first home buyers,” Mr Reardon stated.

“Not only does this data show that there has been an increase in the number of loans for the construction of a new home, there was also an increase in the purchase of residential land as well as new and established homes.

“There has been a substantial improvement in sentiment and confidence in the housing market.

“The increase in construction loans can be seen across all jurisdictions except for NSW. More leading indicators of building work entering the pipeline suggests that the pickup in building work in NSW has been slower, but it is emerging.”

Across the states, the number of loans to owner-occupiers in August for the purchase or construction of new dwellings increased in Tasmania (+48.9 per cent), the Australian Capital Territory (+39.9 per cent), Queensland (+26.2 per cent) Western Australia (+24.6 per cent), South Australia (+14.0 per cent), and Victoria (+2.8 per cent).

They declined in New South Wales (-11.0 per cent) and the Northern Territory (-20.4 per cent).

The value of new loan commitments for all housing grew for the third second consecutive month, hitting the highest rate since January 2018.

Adrian Kelly, President of the Real Estate Institute of Australia, warned the figures may be misleading.

“Whilst this is the largest monthly increase in the history of the series, some caution in the interpretation in the month-to-month comparisons is required, as ABS points out that commitments in August reflect customer demand in earlier months, with lenders reporting that current processing times mean that August finance commitments reflect customer demand in June and early July, prior to Victoria imposing Stage 3 and Stage 4 restrictions,” Mr Kelly said.

“The recovery in lending is encouraging and reflects the earlier easing in restrictions on movements and the response, but does not yet reflect the impact of second-wave restrictions in Australia’s second-largest market of Melbourne,” Mr Kelly concluded.

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