Loan demand defies claims of softer market

Industry data and commentary may suggest the post-Covid rebound in our national real estate market is losing steam, but home-loan data suggests otherwise.

In the latest figures released by the Australian Bureau of Statistics, the total value of new housing loans rose 3.9% month-on-month in July to $30.6 billion.

Investors are leading the charge. Their loan commitments increased 5.4% to $11.7 billion – that's 35.4% higher for July 2023.

The value of owner-occupier loans has also jumped impressively. 

It's up 2.9% to $18.9 billion compared with the June number, and it's 21.4% higher than July last year.

First-home buyers are also showing strong activity. Their loan application total is 19.7% higher than in July 2023, but only marginally up (+0.8) on the June figure.

Nationally, the average size of new owner-occupier and new investor loans reached the same all-time high of $641,000 in July. 

The strong undercurrent of loan applications suggests that even if there is a mild softening in the market, it won't last long.

Many buyers are expecting mortgage costs to fall as the Reserve Bank of Australia sees economic activity drop and political concerns voiced about a negative quarter of growth around the corner.

The continued optimism of owner-occupiers is critical to market strength. 

They are the majority of buyers and sellers, and their loan requests are revealing.

When the profile of their loans is compared with July 2023, it looks like this:

• Up 21.3% for the purchase of existing dwellings. (Compared to June 2024, up +4.1%).
• Up 16.1% for the construction of new dwellings. (Compared to June 2024, down -3.2%). 
• Up 19.9% for the purchase of new dwellings. (Compared with June 2024, up +5.8%.)

Mish Tan, ABS head of finance statistics at the ABS, said: “Investors have continued to see the largest growth in new loans over the past year, increasing more than a third in value since July 2023, from $8.6 billion to $11.7 billion. This is close to the record high of $11.8 billion reached in January 2022.

“The increased investor activity we're seeing in the lending statistics is mostly because more loans are being approved. It is only partly driven by higher dwelling prices”, Dr Tan said.