Home loan values on the rise

The value of new Australian home loans have risen to their highest peak yet.

Numbers released by the Australian Bureau of Statistics (ABS) reveal the value of new home loans has increased 3.7 per cent to a record high of $31 billion.

ABS head of Finance and Wealth Katherine Keenan says owner occupiers and investors have all been getting bigger home loans, with owner occupiers still the majority of home loan holders.

“The value of new loan commitments for owner-occupier housing reached another all-time high in April 2021, up 4.3 per cent to $23 billion. 

“New loan commitments for investors rose 2.1 per cent to $8.1 billion, which was the highest level since mid-2017.”

The majority of these loans were for existing properties, with the demand for new builds falling by 11.4 per cent.

Katherine links the fall in new build home loan commitments to the government’s HomeBuilder grant, which was reduced by $10,000 at the start of the year and closed to new applicants from 14 April. It’s the second consecutive monthly decline and may hint at an increased focus on existing properties.

“These were the first monthly declines since the HomeBuilder grant was introduced in June 2020,” she says. 

“However, the value of construction commitments remained at a high level.”

The majority of this value came from New South Wales and Victorian buyers, where loan value rose 8.6 and 8.4 per cent respectively. Conversely, numbers in Western Australia fell for the second month in a row, this month by 7.9 per cent. This may be another grant impact; the state’s Building Bonus, which was offered in addition to the federal HomeBuilder grant, finished at the end of last year.

While the total value of owner-occupier home loans has risen, that may have more to do with the price of property than the number of purchases. The ABS reports the total number of owner occupier first home buyer loan commitments fell by 1.9 per cent in April, the third consecutive monthly drop. 

It may also be a sign the property market is regaining equilibrium – even with these decreases, home loan commitments remain at their highest level since July 2009.

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