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Latest figures from the Australian Bureau of Statistics indicate that lending remained strong in the first quarter of 2022.
Hayden Groves, president of the Real Estate Institute of Australia (REIA), noted that while the latest figures remain within a historical high range, overall trends reflect a stabilising market.
“With inflation – particularly of non-discretionary goods outside of budget 2022 forecasts, coupled with a rise in interest rates and a federal election – a stabilising or a new normal approach is reflected in these lending figures,” Mr Groves remarked.
Housing Industry Association (HIA) economist Tom Devitt explained that the impact of yesterday’s (3 May) rise in the cash rate on home lending trends would likely take six months to emerge.
Both organisations noted that the figures on investor activity were promising.
“Investors continue to drive the market with the value of new investor loan commitments hitting a record high of $11.7 billion in March and was likely the key contributor to the rise in the value of new housing loan commitments,” Mr Groves said.
But Mr Devitt added that due to the strength of owner-occupier activity, investors’ share of the pie “still represents just 35 per cent of the total market, well below the 46 per cent seen in 2015”.
Overall, the value of new owner-occupier loan commitments rose 0.9 per cent to 21.6 billion in March, but that is still 2.2 per cent lower than the same time last year.
Mr Groves also highlighted fluctuations in first home buyers’ apparent ability to get a foot on the property ladder.
“The number of loans to first home buyers is a whopping 32.8 per cent down on what was recorded a year ago, however new loan commitments to this market increased 4.2 per cent in March after two months of decreases,” the REIA president said.
Mr Groves used these figures to call on the government to consider tax code changes to help all buyer demographics secure affordable housing.
“While we support current government and opposition policies being presented during the federal election, prohibitive taxes such as the extremely high stamp duty payments are a key concern in limiting supply and affordability,” he said.
And Mr Devitt noted that while fewer buyers seem to be constructing or purchasing new homes, Australians seem to be continuing to pursue building projects in the form of renovations.
Loans for the construction or purchase of new homes fell by 3.4 per cent in the first three months of 2022 compared to the previous quarter, but lending for renovations reached a new record high in March, accounting for more than $600 million.
“This is up by 8.6 per cent for the month, and three times the level seen pre-pandemic,” Mr Devitt commented.
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