Number of home loans fall in September, but the value of loans rise

by Julia Corderoy11 Nov 2014
The number of home loans financed has fallen for the second consecutive month in September, but the value of those home loans financed has increased as property prices surge.

According to official figures released by the Australian Bureau of Statistics, the number of housing finance commitments dropped 0.7% in September. However, despite the number of home loans decreasing, the value of housing finance increased in September. The figures reveal an increase of 2.3% in the total value of home lending.

Harley Dale, Housing Industry Association’s chief economist says lending for new housing has reached a well-received fresh high.

“From the stimulus-fuelled period around the GFC, lending for new housing is at its highest in 20 years. That is a healthy result in terms of the short term outlook for new home construction,” he said.

Growth in investor lending continues to outpace loans for owner occupiers, with the value of loans approved for owner occupied housing up 1.4% in September, compared to a 3.7% for investors. Savanth Sebastian, economist for CommSec says the talk of regulation to curb investors may have caused the increase in investors to more than double that of owner-occupiers. 

“In fact, for the second consecutive month the value of investor loans has surpassed owner-occupiers (excluding refinancing) – a phenomenon that has not occurred previously in records going back over 40 years. All the discussion about macro-prudential tools may have resulted in investors looking to get into the market ahead of any policy changes,” he said.

While the Reserve Bank – who has had its eye on the surging investor market – might be concerned about this data, the Real Estate Institute of Australia says the decrease in the number of loans indicate the housing market is cooling.

“The September 2014 lending figures indicate a moderating market with September… REIA believes that there is no need for the introduction of macro-prudential tools – to do so may give rise to unintended consequences,” REIA President, Peter Bushby said.