Property investor lending at all time high while first homebuyer activity stalls

Mortgage activity in Australia is showing few signs of letting up, with the total value of new home loan commitments rising 2.6 per cent over January to reach a record high of $33.7 billion.

According to the Australian Bureau of Statistics’ (ABS) latest lending data, renewed investor activity is key to that growth. 

Over the month, new lending to investors jumped up by 6.1 per cent. It currently sits at a record high of $11 billion. 

“The value of new loan commitments for investor housing has grown for 15 consecutive months, consistent with the strong housing market and growth in house prices,” said ABS head of Finance and Wealth, Katherine Keenan.

Investor activity was busiest in New South Wales (up 9.8 per cent), Victoria (up 11.1 per cent) and the Australian Capital Territory (up 22.8 per cent).

Commenting on the data, CEO and founder of Futurerent, Godfrey Dinh said the ABS figures were a strong indication that the omicron wave did little to dent investor confidence.

“We’re seeing growing confidence in property investment, as investors want ‘in’ before prices eventually slow and interest rates creep up. They’re not worried about Omicron,” he said.

“The majority of property investors we speak to are chasing yields and buying positively geared property, and investing in growing areas benefiting from the decentralisation arising from more flexible working arrangements.”

Investor lending currently makes up around one third of all new housing loan commitments. The ABS said this reflects stiff competition from the owner occupier market over the past 18 months.

In January, the value of new owner-occupier loan commitments increased 1.0 per cent to $22.7 billion. Once again, New South Wales, Victoria and the Australian Capital Territory led the charge, rising by 3.3 per cent, 3.2 per cent, and a staggering 33.5 per cent, respectively.

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The data on first home buyers, however, suggests that the cohort is finally succumbing to affordability constraints.

“The number of new loan commitments to owner-occupier first home buyers fell 6.9 per cent in January 2022. This was 32.6 per cent lower compared to a year ago, when first home buyer activity was near a record high,” the ABS said.

Owner-occupier first home buyer commitments fell in nearly all states and territories, with Queensland (down 16.1 per cent) and Western Australia (down 8.1 per cent) recording the steepest declines.

The Australian Capital Territory was the sole exception, with new lending to first home buyers up by 25.7 per cent.

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