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Value of home loan commitments rises after three months of falls

The value of new home loan commitments rose 6.3 per cent in November, marking continued strength in the national housing market.

The latest Australian Bureau of Statistics figures show the value of new loan commitments for housing rose to $31.4 billion, following three months of falls.

The value of new loans to owner-occupiers rose 7.6 per cent in November, which was 17.2 per cent higher than a year ago.

The value of loans to investors increased by 3.8 per cent to an all-time high of $10.1 billion, while the value of first-home buyers loan commitments increased 3.7 per cent to $5.38 billion.

However, this is 6 per cent lower than 12 months ago.

REIA President Hayden Groves said the ABS figures showed the value of new loan commitments for owner-occupier housing rebounded 7.6 per cent in November.

“Average loan sizes reached new highs in all states and territories except Western Australia while activity in the investor market was also strong.

“The average loan size for owner-occupier dwellings – which includes construction and new and existing dwellings – rose to an all-time high of $596,000.

“This indicates that housing affordability in some regions could still be a key issue facing Australians, however, the number of new loan commitments to owner-occupier first-home buyers rose slightly at 1.9 per cent in November 2021 (seasonally adjusted).”

Mr Groves said investor loans equated for one-third of all loans.

“The value of new loan commitments to investors rose 3.8 per cent, reaching a new all-time high of $10.1 billion,” Mr Groves said.

“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.

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

“It is our 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.”

Owner-occupiers return

Canstar Group Executive, Financial Services, Steve Mickenbecker, said owner-occupiers are borrowing again after a recent slowdown.

“As if the housing market wasn’t already hot enough, November is the first time in four months that new lending increased,” Mr Mickenbecker said.

“Owner-occupiers strike back. New lending for owner-occupiers saw a resurgence in November following six months of falls and doubling the monthly growth rate of investment lending. It’s a nice feeling to go into the festive season with the home sorted out for the upcoming school year.

“Even first-home buyers jumped back into the market, up 3.7 per cent for the month but still down 6 per cent on November 12 months ago. It’s a long way back for this group when facing competition from investors who are borrowing 87 per cent more than a year ago.”

First-home buyer activity remains strong

After falling away on the back of the removal of a number of Federal Government incentives, first-home buyer activity is also returning.

HIA Senior Economist Nick Ward said first-home buyer activity is above the average of the past decade.

“The number of loans to first-home buyers increased in November and accounted for 34 per cent of owner-occupier loans,” Mr Ward said.

“The value of loans to investors were 69.5 per cent higher in the 12 months to November 2021, compared to the previous 12 months, as investors respond to the very tight rental markets around the country.

“The boom in renovations also looks set to continue with lending for renovations up by 91.4 per cent in the 12 months to November compared to the previous 12 months.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.