Home lending falls across the board

by Manuelita Contreras12 Feb 2018
Latest data from the Australian Bureau of Statistics shows that the housing market has continued to lose steam, with the total value of new housing commitments falling by 1.6% in December by seasonally adjusted terms.

Unsurprisingly, the fall in the value of investment loans was more significant at 2.6%. For owner-occupier loans, the decline was 1.0% in December over the previous month by seasonally adjusted terms.

While the steam continues to be taken out of the housing market, a healthy $22bn was advanced to residential buyers in December – the second largest amount ever, said CBA chief economist Craig James. 

“But exuberance has been replaced with caution,” he said. 

House lending for first home buyers seems to show signs of slowing down – the number of first home buyer loans as a percentage of total owner-occupied loans declined to 17.9% in December from 18.0% the previous month.

Still, first home buyers continue to have an increased presence in the market, said Real Estate Institute of Australia president Malcolm Gunning.
 
In NAB's data released in early February, first home buyers accounted for almost two in five sales in new housing markets and around one in three in established markets in the December 2017 quarter.

The ABS itself said the number of loans to first home buyers has recorded strong growth in recent months, driven chiefly by changes to first home buyer incentives made in July by the NSW and Victorian governments.

"The ABS is working with APRA and the financial institutions to establish the size of the increase in first home buyer lending in recent months and improve the quality of first home buyer statistics more broadly. These numbers may be revised and users should take care when interpreting recent ABS first home buyer statistics," it said.

By numbers, 55,161 owner-occupied housing loans were approved in December, down by 2.3% from 56,876 the previous month in seasonally adjusted terms.

“While it is somewhat surprising to see a drop in activity in December, given that it is traditionally a strong month for home loan demand, today’s results are very indicative of the market we are in,” said Mortgage Choice CEO John Flavell. 

Owner-occupied loans for the construction of houses went down by 1.1% -- the fourth time the number declined in five months.

Recording a bigger decline is the number of loans to buy newly built houses, which fell by 3.8%, while loans for purchase of established homes went down 2.3%. 

At the national level, the average home loan was $393,200 in December, up by 4.6% on the year. 

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