Property Loans Up 19 Percent: ABS

A roofer stands on the roof of a new home under construction in a new development in Albany, Western Australia, on April 15, 2024. (Susan Mortimer/The Epoch Times)

New loan commitments for housing rose year over year in June, with investor lending growth outpacing owner-occupier growth, Australian Bureau of Statistics (ABS) data showed.

According to the ABS, total new housing loan commitments rose 19.1 percent to $29.2 billion, with loan commitments for investor housing surging 30.2 percent to $11.0 billion.

New loan commitments for owner-occupier housing climbed 13.2 percent to $18.2 billion.

New investor loans surged 56.7 percent in Western Australia, 38.3 percent in South Australia, and 34.5 percent in Queensland. Moreover, new investor loans grew 27.3 percent in New South Wales, and 9.4 percent in Victoria.

“Over the past 12 months, New South Wales continued to have the highest average loan sizes for both owner-occupiers and investors. In June, it rose to $780,000 for owner-occupiers and $818,000 for investors,” said Mish Tan, ABS head of finance statistics.

The number of new owner-occupier first home buyer loans went up 3.4 percent during the month, thanks to a 6.5 percent rise in Victoria.

ABS noted that Victoria continues to have the highest number of first-home buyer loans of all states and territories since June 2017.

Businesses also witnessed new borrower-accepted loan commitments swell 25.7 percent to $2.78 billion for construction, and expand 17.5 percent to $6.11 billion for purchase of property.

Maurice Tapang, Housing Industry Association (HIA) economist, said that the increase in loan commitments signified stabilising market confidence despite unchanged interest rates.

“This suggests that building activity is at, or near, the trough in this cycle,” said Tapang.

“Prices of home building materials rose by 1.1 percent in the year to June 2024. This is around half the rate of increase seen in the decade prior to the pandemic.”

Home Building Approvals Remain Low

Despite a seemingly positive trend for loans, Master Builders Australia said that June was the worst month since 2012 for higher density home building approvals.

“For owner occupiers, the price of new dwellings is 5.4 percent up on a year ago. This is partly the result of labour shortages and other cost pressures in the new home building market,” said Shane Garrett, Master Builders Australia chief economist.

“We need much higher volumes of new home building on this side of the market if rental market pressures are to be relieved.”

The lobby group’s CEO Denita Wawn has called on the Australian government to facilitate the building of more homes.

“Whether it’s detached housing or higher density, the same constraints and cost drivers apply: workforce shortages, woeful productivity, lack of critical infrastructure, high taxes and charges, slow approval processes, and costly union EBAs,” said Wawn.

“The housing shortage makes it difficult to contain inflation. This puts pressure on the Reserve Bank to lift interest rates leading to even higher rental inflation and less building activity.”