Following dwelling approvals down, housing finance commitments have begun to soften from the stellar peaks reached just a few months ago, with First Home Buyers experiencing the bulk of the early pain in the softening market.
The value of loans for new housing dipped 1.6% to AUD32.05 billion in June 2021, compared to a month earlier, with only Investors (+0.7% at AUD9.19 billion) growing their aggregate value, with owner-occupiers (-2.5% at AUD22.86 billion) taking the brunt of the declines. However, within the owner-occupiers, the entirety of the pain was reserved for first home buyers (-7.8% at AUD6.32 billion).
Popular wisdom has it that first time buyers are being squeezed out by higher prices (see the previous item in this edition of Statistics Count). The lending data seems to confirm this is the case.
However, as the first chart shows, softening of lending is no great pain, for a market where the total value of loans is almost 83% higher than a year earlier, as the second chart here shows.
Given the pandemic-induced circumstances lens through which all is examined right now, most of the interest in the lending market has been focussed on the virulence of the investor interest. It is not immediately clear in this third chart, but investors were never far from the market over the last two years.
Investor loans for construction were up almost 80% year-ended June, but for newly built residences, just 15.0%.
What may be most significant here is that the latest monthly data shows that loans for owner-occupied construction were down 17.5% in June, compared with May, on a seasonally adjusted basis. Again, that has a lot to do with first home buyers walking away from the market post-stimulus, which is graphically well presented here.
For all the softening in housing finance, the value of loans for alterations and additions shows little sign of abatement. Remarkably, in June, the total value of loans lifted 23.4% compared with May, rising to AUD710 million.
For all that Australia is building anew right now, it is also renovating the massive existing base of housing stock and using plenty of cheap money to do it!