The Australian Bureau of Statistics (ABS) reported that the October spike in construction loans was 11.5%. This is the fourth consecutive month of an increase following the HomeBuilder announcement by the federal governments.
ABS lending indicator data revealed that 6,631 mortgages were taken out for new homes last month. This represents an 82.8% increase in loans for new homes compared to the previous year.
This has pushed the monthly loan obligations to $2.85 billion. This is the main driver of 0.8% growth in residential new owner-occupier loans.
Angela Lillicrap, from the Housing Industry Association (HIA), stated that HomeBuilder was a catalyst for improving consumer confidence in the housing market. Other housing incentives, such as record-low interest rates, have also played a role in strengthening the market.
“We do not expect this to be the peak of the cycle,” she said. “HIA new home sales data suggests that detached housing finance approvals will continue to be strong over the coming months. The extension of HomeBuilder will see strong results carry over into 2021.”
Lillicrap reported that the quality and number of construction loans for owner-occupiers increased by 62.3% in October compared to last year. This improvement could be seen in all 50 states and territories.
Comparing year-on-year figures, loans for new home-building for owner-occupiers rose the highest in Queensland at 106%, followed by Western Australia’s 94.1% and Northern Territory’s 91.2%. These numbers rose in Victoria (44.5%), South Australia (31.9%), New South Wales (31.9%), and Tasmania (28.5%). They rose 16.1% in the Australian Capital Territory.
ABS’ data also showed that the number of owner-occupier first home buyer (FHB) loan commitments jumped by 3.4% in October, reaching 13,481. This was 30% more than any month prior to COVID-19. This number has been at this level since 2009 when FHB incentives were tripled in order to combat global financial crisis.
FHBs held 42% in total owner-occupier loan obligations in October. They are the most committed lenders since over a decade.
The findings came on the heels of Canstar’s 2020 Consumer Pulse Report showing that 10% of Australian adults are currently prioritising saving for a home.
“With first home buyers and lending for new builds booming, political leaders must be congratulating themselves on the COVID-19 support measures for these sectors,” said Steve Mickenbecker, financial services group executive at Canstar.
“The ABS October lending commitments data shows that Australia is embarking on a housing led recovery, which should strengthen in coming months now that Victoria has opened up for business.”
Seasonally adjusted values for loans to owner-occupier property owners rose 0.7% in October and 23.3% in the past 12 months. There were increases in all 50 US states and territories with the exception of Victoria and ACT.
Adrian Kelly, president of Real Estate Institute of Australia said that lending continues to recover and could contribute significantly to GDP for December quarter.
He claimed that Victorian homeowner-occupier loans were reflecting severe effects of Stage 4 lockdown.
“Home loans for owner-occupiers fell 9.3% reflecting decreased housing market activity in August and September due to the COVID-19 stage 4 lockdown in Melbourne and restrictions in regional Victoria, and is consistent with our feedback from agents on the ground,” he said.