Housing finance shows investors return, construction surge

Investors are returning to Australian property markets, with the number of investor loan commitments rebounding to pre-pandemic levels, while at the same time finance commitments to build new houses continues to surge.

Data from the Australian Bureau of Statistics showed investor loan commitments rose by 5 per cent in September, following a 9 per cent rise in August.

Those loans were collectively valued at more than $5 billion - a similar value to the pre-pandemic levels recorded in February.

The data correlates closely with a new survey released this week by CUA, to which 32 per cent of respondents said they were existing homeowners looking for either a different home or an additional property.

A third of respondents to the CUA survey said they believed now was a good time to buy before the market picks up steam, and while interest rates remain at record lows.

Your Property Your Wealth director Daniel Walsh said enquiry from investors had soared at his buyers agency with many reporting positivity around future market conditions.

“Enquiry is from both first-time and seasoned investors who are keen to take advantage of the low interest rate environment and purchase a property before prices rise any further,” Mr Walsh said.

“Many investors have been watching and waiting to see what happened to property prices during the pandemic and now feel more confident to move forward with their investment plans. 

“Of course, now we can all see that prices have held up extremely well, and have even risen in some locations.”

Overall, the number of new home loan commitments for owner-occupiers rose 5.9 per cent in September, taking the yearly gain to 25.5 per cent.

All states and territories bar Victoria and the Northern Territory recorded rises, with the biggest increases for new home loans in WA, New South Wales and Queensland. 

Real Estate Institute of Australia president Adrian Kelly said the historically high loan commitments were a reflection of low interest rates, improving consumer sentiment in the property sector and HomeBuilder incentives.

Around half of the rise in September’s owner occupier housing loans were for new houses, the ABS said.

Construction loans rose 25.3 per cent in September, building on a 19.2 per cent rise in August, as various government stimulus packages, headlined by the federal government’s $25,000 HomeBuilder grants, continue to stoke activity in new housing.

Housing Industry Association chief economist Tim Reardon said ABS building approvals data also reflected the rising confidence, with the third-strongest month of approvals in 16 years recorded in September.

The ABS said approvals rose sharpest in WA, at 42.6 per cent, followed by South Australia at 28.3 per cent, Queensland at 19.3 per cent, Tasmania at 18.8 per cent, Victoria at 12.4 per cent and New South Wales at 4.6 per cent.

Mr Reardon warned, however, that the high volumes of sales, loans and approvals linked to government stimulus packages would be a relatively short-lived boost.

“HomeBuilder was designed to provide consumers with confidence to return to the detached housing market,” Mr Reardon said. “It has been very effective at achieving this goal.

“This new work entering the pipeline will offset the significant declines observed from March as restrictions were announced and will ensure a stable supply of new building projects over the next nine months.”