Housing finance rises to new record-high

Housing finance hit an all-time high in November, with the latest official data indicating investors are starting to return to property markets across the country.

Australian Bureau of Statistics data showed the total value of new home loans was more than $24 billion in November, and while owner-occupiers accounted for the lion’s share, investor lending rose by a 6 per cent.

Overall home loan values increased by 23.7 per cent year-on-year, illustrating Australian property markets’ resilience against the pandemic.

November was the sixth consecutive month of housing finance increases.

“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,” Real Estate Institute of Australia president Adrian Kelly said.

The data also indicated the success of the federal government’s HomeBuilder stimulus and various state government initiatives to boost construction of new homes. 

Housing Industry Association analysis showed the number of loans for new houses in the three months to the end of November was 83.7 per cent higher than the same time in 2019, while the number of loans for vacant blocks was up 99.2 per cent compared to the same period.

Loans for new houses increased the most in WA (up 144 per cent), followed by Queensland (up 128 per cent, and the Northern Territory (up 127 per cent).

“HIA New Home Sales data suggests that detached housing finance approvals will continue to be strong over the coming months,” HIA economist Angela Lillicrap said.

“The extension of HomeBuilder at the end of November is not a factor in this month’s result, but will see the strength in housing finance data extend into 2021.”

Victoria’s easing of coronavirus restrictions was also illustrated by the stats, with lending surging by 20 per cent in November as buyers were able to return to on site auctions and open homes.

“November saw a strong finish to the spring selling season, though with lockdowns it felt more like the start of the season not the end, particularly in Melbourne,” Canstar finance expert Steve Mickenbecker said.

“If the numbers are anything to go by, we could see an extended selling season running into 2021.”

Ratecity.com.au research director Sally Tindall, however, raised concerns that the soaring demand for home loans may result in an increase in mortgage stress.

“While buyers in 2020 had a fleeting opportunity to capitalise on falling property prices, that’s unlikely to continue in 2021,” Ms Tindall said.

“Records in home lending are being smashed, yet the government is pushing ahead with changes to responsible lending legislation to free up the flow of credit.

“With property prices expected to soar this year, and pressure on buyers to overstretch themselves in fear of missing out, responsible lending laws will be more important than ever.

“Low rates might be stimulating home lending, but people can’t bank on them sticking around for the life of their loan. 

“When rates do finally rise, some people might find they’ve bitten off more than they can chew.”