October brought 2.6% housing finance increase and overall surge

  • Investor loan commitments saw a 0.6% increase, the first since February
  • First-home buyers rose to 18.1% of all loan approvals
  • Loans for newly-built dwellings behind much of the surge

While the real estate sector has weathered a difficult 2018, a look back can often show a silver lining – as is the case here.

The arrival of spring often heralds a swell in Australia’s real estate market, and 2018 is no exception. Housing finance as a whole saw a rise of 2.6% from September – this increase was part of a spring surge comprised of a host of positive figures.

A 0.6% gain can be seen in the nation’s investor loan commitments from September to October, making for an increase from $9.8 billion to $9.9 billion. This is the first time this value has risen since February.

Seeing a more substantial boost was the lending to owner-occupier buyers, which in October rose by 4.8% to a value of $13.9 billion – this figure ignoring the refinancing of existing loans.

Increases to both investor loan commitments and loans to owner-occupier can largely be attributed to loans for recently constructed dwellings.

First-home buyers are the other hero in this period, first-home buyer loans increasing from 8764 in September to 10,137 in October. Subsequently, first-home buyer loans amounted to a total value of $38.5 billion for the twelve months up to October.

This is the highest value seen for such a period in eight years – first-home buyer loans amassed $41.3 billion in the twelve months preceding May 2010.

With auction clearance rates dropping below 50% for many of Australia’s largest markets due to lenders being increasingly hesitant to provide home loans, this spring surge is a welcome sign that the real estate market may be on a positive trajectory regardless.

Figures courtesy of Australian Financial Review

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