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New data from the Australian Bureau of Statistics (ABS) found loan commitments fell during September, marking the fourth consecutive month of decline.
The total value of new loan commitments fell 8.2 per cent during the month to $25.14 billion, led by a 9.3 per cent drop in owner-occupier commitments and a 6 per cent drop in investor loans.
Real Estate Institute of Australia (REIA) president Hayden Groves said the data represents an acceleration of falling loan commitments given “the fall is more than double on the August figure where the total value of new loans dropped by 3.4 per cent, a reflection of higher interest rates and stabilising house prices”.
However, he did caveat this by outlining that “the value of loan commitments in September remained well-above pre-pandemic levels”.
“Owner-occupier loans in September were 23 per cent higher than in February 2020, while investor loans were 60 per cent higher,” he said.
“These figures show housing values have remained relatively stable post-pandemic; however, housing affordability is becoming critical as the number of new loan commitments to owner-occupier first home buyers fell 8.3 per cent in September 2022, following a rise in August of 10.4 per cent.”
Mr Groves outlined that the figures ratify the experiences of agents on the ground, as market conditions pit them in a hard-fought battle for listings, “with both investors and home owners taking their time in making purchasing decisions”.
“This is not dissimilar to pre-pandemic market conditions with activity still above what it was,” he affirmed.
However, he did question whether lending trends would plateau or continue to decline to pre-pandemic levels, especially considering the Reserve Bank of Australia’s (RBA) intention a continuation of the rate hiking cycle, which Mr Groves explained could result in “further declines in lending”.
In addition to lending commitments, building approvals also slowed during September — down 5.8 per cent, in seasonally adjusted terms — following a 23.1 per cent increase in August.
“Less activity in both existing housing inventory and building approvals and completions is not a good sign for housing supply; and shows a need to get to work on the National Plan for Housing and Homelessness and the National Affordability and Supply Council,” he said.
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