Housing finance surge led by property investors

There has been another increase in housing investment loans, which has driven a strong rise in home lending in December last year.

The Bureau of Statistics estimates state that new lending for residential properties were $30.6 billion in December. This is an increase of 4.7% on the month preceding it. Of that, $18 billion went to owner-occupiers, up 3.8 per cent during the month, while new lending to investors surged 6 per cent to $12.6 billion.

Mortgage Choice spokeswoman Jessica Darnbrough said investors are now the biggest proportion of the national market on record, at 41 per cent, although the owner-occupier market is also surging with 53,920 loan commitments.

“We haven’t seen this level of demand for home loans since October 2009,” she said.

Changes to the data to correct for an under-reporting of first home buyer loans by some financial institutions resulted in the latest data estimating that 14.5 per cent of owner-occupier loans went to first time purchasers, down from 14.6 per cent the month before.

CommSec economist Savanth Sebastian said the best feature of the data was a record $2.92 billion borrowed in December to fund the construction of new homes.

“Housing is always a function of demand and supply and the upcoming lift in the new supply of homes will lead to slower growth of home prices and reduced interest by investors,” he wrote in a note on the figures.

“Interestingly the result comes before the latest rate cut and was a reflection of a more stable interest rate environment as opposed to the discussion of further rate cuts. No doubt the housing sector will see another lift in activity over 2015.”

The ABS figures estimate that 6,258 loans were issued in December to fund the construction of a new dwelling, up 0.8 per cent on the previous month, while 2,750 were taken out to fund the purchase of a newly built residence, down 1.8 per cent.

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