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The Real Estate Institute of Australia (REIA) has cautioned that a rise in the value of housing loans should not overshadow a decline in first home buyer activity, as the broader affordability crisis continues to worsen.
The latest Lending Indicators data from the Australian Bureau of Statistics (ABS) has shown that the value of new housing loans registered an overall 1 per cent increase to $30.4 billion in August, with the number of FHB loans dropping by 1.5 per cent in the same period.
Weighing in on these findings, the president of the REIA Leanne Pilkington noted that a drop in first home buyer loans highlights the “ongoing struggles faced by young Australians attempting to enter the property market”.
“The decline reflects the strain on affordability, exacerbated by rising property prices and higher interest rates, which are pushing home ownership further out of reach,” she said.
Pilkington noted that first home buyers are being “increasingly sidelined” from the market as buyers who are trading up are stretching their finances to “unprecedented levels to meet loan repayments”.
On the investor side, there was a 1.4 per cent rise in the value of new investor loans to $11.7 billion over August 2024, which is 34.2 per cent higher than 12 months prior. But the REIA cautioned not to assume that investor activity is coming back in force. Pilkington commented that this figure was more reflective of price growth across the nation as opposed to a rise in investor participation.
Though certainly one state has seen its fortune change when it comes to investor activity.
“With investor loans up 34.2 per cent since August 2023, the increase is almost solely due to an influx of investors in Queensland which saw an incredible $200 million rise,” said Pilkington.
With every jurisdiction except for the ACT recording a loss in investor loan values, the president explained that the territory’s exceptional result was “predominantly due to a large number of off-the-plan apartments settling at once”.
Pilkington described the widespread decreases in investment loans across the nation as “concerning, especially in light of current discussions surrounding negative gearing” as the flow-on effect of investors leaving the market could be consequential for the fate of the nation’s rental market. Though she acknowledged that prices in that sector had recently evened, delivering some relief.
Looking ahead, she said she hopes policymakers will focus on measures “that encourage housing supply as the long-term solution”.
“While first home buyer (FHB) loans may have dipped, addressing supply shortages and broader cost-of-living issues will be more effective in ensuring sustainable affordability for both FHBs and investors.”
"Still, the data points to a growing imbalance, underscoring the need for urgent policy intervention to address housing affordability across the country,” she added.
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