New home lending down for first time in nine months

by Madison Utley09 Apr 2020

The value of new loan commitments for housing fell 1.7% in February, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) data.

The fall followed nine months of considerable growth from mid-2019 onwards.

However, while new loan commitments for both owner occupier housing and investor housing were down this month, falling 1.7% and 1.9% respectively, the number of new commitments for first home buyers rose a further 0.4% following January’s rise of 0.5%.

The ABS clarified there was no notable impact of the COVID-19 virus on new lending commitments for February 2020. The data from March will be the first to reflect any impact from the pandemic.

However, despite the figures having a two-month lag from real time events, Sally Tindall, research director at RateCity.com.au, said the data is “an early sign of what’s to come”.

“The devastation of the Australian bushfires, and now the coronavirus pandemic, will take their toll on the Australian housing market,” she said.

“We expect new lending will slow significantly as would-be buyers face job losses and the real estate industry grapples with new rules for auctions and open homes.”

While it seems reasonable to expect market activity to slow down considerably, certain buyers may be poised to benefit.  

“People who have been waiting for an opportunity to get into the market at a more affordable price may use this as an opportunity, but these buyers are still likely to be few and far between,” said Tindall.