New home lending falls in November, but value of home loans rises

New home lending falls in November, but value of home loans rises
New home lending falls in November, but value of home loans rises

Lending to households building and purchasing new homes remained soft in November, with construction loans sliding 8.4 per cent, according to figures released from the ABS.

The seasonally adjusted figures saw first home buyer loans decline 0.9 per cent over the month, but remain 3.4 per cent up over the year.

HIA senior economist Georgan Murray said the weakness in construction lending in November is largely a legacy of the soft sales volumes that home builders were experiencing during the first half of the year. 

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New home lending falls in November, but value of home loans rises

Number of new loan commitments in November. Source: ABS

"As conditions in the broader housing market recovered during the second half of 2019 lending to households purchasing established homes improved", Murray said.

"Lending to owner-occupiers purchasing established homes held steady in November, recording 0.1 per cent increase."

Despite the decline in lending to new homes, there was more positive news for the value of new home loans.

The value of new housing loan commitments rose again in November, up 1.6 per cent to take the annual gains to 10 per cent.

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New home lending falls in November, but value of home loans rises

Value of new loan commitments in November. Source: ABS

There was a further increase of investor activity, with a 2.2 per cent increase in value of home loans written for investors, however they are still 3.2 per cent down on the year.

The figure is around 10 per cent higher than the lowest point registered earlier in the year.

Despite the number of first home buyer loans declining 0.9 per cent, the value of loans for first home buyers rose by 2.1 per cent to be nearly 20 per cent up on the year as the market bounces back from its June low.

Paul Marshall, chief executive of RateCity.com.au, said first home buyers were taking the bull by the horns.

“First home buyers have made a comeback in the past year, with close to 20 per cent more borrowing compared to the year before, as the stars aligned for them,” he said. 

“Three RBA rate cuts, a housing market that had lost some steam, and changes to serviceability increased the borrowing capacity for some people – a perfect storm for first homebuyers.

“November saw the highest level of new borrowing on record since October 2009 – around the same time the governments’ first home owner boost ended.

“While we haven’t returned to the peak of first home buyer levels, we’re likely to see more buyers continue to surge into the market this year, particularly helped along by the first home loan deposit scheme,” Marshall said.

 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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