Australia’s housing finance market continues to gain momentum, with new loans rising by 1.0% in August, bringing the total to $30.4 billion. So, what’s behind this steady growth, and how are different states contributing? Queensland, in particular, is leading the charge, playing a major role in this lending surge. Mish Tan, the ABS head of finance statistics, explained that investor lending has been pivotal to the increase. “The value of new investor loans rose 1.4 per cent to $11.7 billion, which is 34.2 per cent higher than August 2023,” Tan said. Investor lending is now approaching levels seen in early 2022, suggesting that confidence in the market could be returning.
For owner-occupiers, the growth has been more measured. New loans in this segment increased by 0.7%, bringing the total to $18.7 billion. However, first-home buyers faced a minor setback. The number of loans in this group fell by 1.5% to 9,869 in August. Still, the overall figure is 9.2% higher than the same period last year, indicating that despite month-to-month fluctuations, the market remains attractive to new entrants, especially in states like Queensland and Victoria.
Queensland’s role in this growth stands out, with the state contributing heavily to the national rise. The state’s housing loan commitments grew by a staggering $2.0 billion over the past 12 months, marking a 41% increase. The gains in New South Wales and Victoria, while positive, were less pronounced, with rises of 19% and 11.4% respectively. Western Australia and South Australia showed stronger growth than Victoria, but Tasmania and the Northern Territory lagged behind with more modest gains. Meanwhile, the Australian Capital Territory recorded a decline of 9.5%, revealing that not all regions are benefitting equally from the housing market’s momentum.
Investor activity has played a significant role in these figures, particularly in Queensland. While other states like South Australia saw investor lending grow by 5.1%, Queensland’s 7.9% rise led the pack. In contrast, investor lending dropped in Western Australia and the Northern Territory, possibly reflecting differing market conditions or tighter regulatory measures. It’s clear that while the overall lending figures are positive, the story is different across each state and territory.
The rise in lending comes at an interesting time as the ABS prepares to transition its Lending Indicators report from monthly to quarterly releases. The final monthly report will be issued on 1 November 2024, covering data up to September. The first quarterly publication will then follow in February 2025. This shift in reporting will offer a broader view of long-term trends but could also obscure some of the short-term changes that monthly reports have captured in the past. For now, however, the market appears to be holding steady, with investor activity returning and Queensland emerging as a key driver of growth.
Looking ahead, questions remain about whether this growth will continue or if the market will begin to cool. Rising interest rates and inflationary pressures are likely to impact housing demand in the coming months. Some experts predict a slowdown, while others argue that investor confidence, particularly in Queensland, could keep the market buoyant for a while longer. What’s certain is that the transition to quarterly data from the ABS will offer a clearer picture of how these trends unfold, providing valuable insights into the health of the housing market across the country. Whether Queensland can maintain its rapid growth or if we’ll see a shift in momentum remains to be seen.
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