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Owner occupier resurgence offers a positive outlook for 2021

The total value of new loan commitments for housing and the value of owner occupier home loan commitments both reached record highs in November 2020, according to the latest Australian Bureau of Statistics (ABS) figures.

New loan commitments for housing rose 5.6 per cent to $24 billion in November, seasonally adjusted – a 23.7 per cent increase on November 2019. 

“Loan commitments for existing dwellings rose 5.9 per cent and were the largest contributor to the rise in November’s owner occupier housing loan commitments,” said ABS head of Finance and Wealth, Amanda Seneviratne.

“Investors are returning to the market, with the value of lending to investors up by 3.7 per cent for the three months to November 2020 compared to the same time last year. This was driven by loans for the purchase of existing dwellings.”

The value of new owner occupier home loan commitments rose 5.5 per cent to $18.3 billion in November 2020 – 31.4 per cent higher than November 2019.

Construction loans

“The number of loans for the purchase of land in the three months to November 2020 is up by 99.2 per cent compared to the same period in 2019,” Ms Seneviratne continued.

“This is the highest result for the second month in a row since the Australian Bureau of Statistics (ABS) began reporting this data in 2002.

“The number of construction loans to owner occupiers in the three months to November was also 83.7 per cent higher than the same time last year.

The value of construction loan commitments grew 5.6 per cent in November, rising 75 per cent since July and following the implementation in June of the Government’s HomeBuilder grant in response to COVID-19.

First home buyer owner occupier loan commitments

It was also another very strong month for first home buyers. The number of loans to first home buyers reached the highest number since 2009.

This was when similar rapid growth was spurred by the temporary tripling of the first home owner grant, which was part of the Commonwealth Government’s economic stimulus package in response to the global financial crisis.

The number of owner occupier first home buyer loan commitments rose 42.5 per cent since the start of the year, in November rising 3.1 per cent to reach 13,905 (seasonally adjusted), and accounting for 42 per cent of the total number of owner occupier loans issued in November.

State by state

“Victorian commitments increased by an impressive 19.6 per cent as COVID-19 restrictions were eased,” said REIA President Adrian Kelly.

The value of owner occupier home loan commitments rose across the largest states and territories but showed mixed results in the smaller ones. 

Investor housing loan commitments and personal finance

The total value of loan commitments for investor housing rose 6 per cent to reach $5.6 billion.

The value of new loan commitments for fixed term personal finance rose 13.2 per cent in November, seasonally adjusted, mostly due to increased commitments for vehicles.

Conclusions and predictions

Other federal and state government incentives and ongoing low interest rates also contributed to the continuing growth in new housing loan commitments.

“It is evident in today’s data that HomeBuilder has been successful in boosting confidence in the market and creating work on the ground,” HIA Economist Angela Lillicrap noted.

Mr Kelly shared Mr Lillicrap’s confidence in the market, stating: “The November lending figures confirm the resilience of the housing market with investors, first home buyers and owner occupiers all active in the market”.

“With limited stock and strong demand driven by a record low interest rate outlook, the market is likely to remain buoyant for the coming 12 months defying the doomsday forecasts of last year,” he concluded.

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