Australian home loans are on the decline

  • The value of new home loans approved in Australia fell 3.2% in March, resuming the downtrend that was briefly interrupted by a small increase of 2% in February.
  • Over the past year, the value of new homeowner and investor loans has fallen by 15.2% and 25.9% respectively.
  • New monthly loans to investors have almost halved from their record highs in 2017.

Australian home loans fell sharply again in March, driven by declines from both homeowners and investors.

According to figures recently released by the Australian Bureau of Statistics (ABS), the total value of new loans fell 3.2% to $ 16.937 billion after seasonal adjustments, leaving the decline from a year earlier at 18. 4%.

March’s drop followed a smaller 2% increase in the value of new home loans in February, resuming the downward trend that has now been in place for over a year.


New homeowner loans fell 3.4% from February to $ 12.396 billion, reversing the 2.8% increase recorded a month earlier.

“There were sharp declines in the value of homeowner loans in seasonally adjusted terms in New South Wales and Queensland in March, after increases in both states the month before,” said Bruce Hockman , chief economist at ABS, in an accompanying statement.

From a year earlier, the total value of new homeowner home loans fell 15.2% nationally.

The ABS said total new homeowner loans fell 2.8% to 31,130 after adjusting for seasonal trends, leaving the number down 13.8% from 12 months earlier.

Loans for the purchase of existing homes fell 3.3% to 23,513 for the month. Elsewhere, those who buy newly constructed homes fell 4.7% to 2,005.

New homeowner loans to build a new home managed to reverse the overall trend, rising 0.1% to 5,612 after seasonal adjustments.

“The number of loan commitments made to first-time buyers was relatively small – down 0.5% – compared to the decline in the number of loan commitments made to non-first-time buyers. which fell 3.3% in March, “ABS said.

Reflecting the decline in homeowner financing in March, the value of new loans to real estate investors continued to decline, sliding 2.7% to $ 4.54 billion from the previous month.

“Nationally, investment home loans also contracted further in March, with the series down 25.9% from March 2018,” Hockman said.

“The level of new loans for investment housing is at its lowest level since March 2011.”

The value of new real estate finance by investors has now fallen 46.5% from record levels set in 2017.

The decline in the value of new home loans to homeowners and investors reflects a variety of factors, including lower turnover in the housing market, falling house prices, the impact of tightening credit standards and lower demand at a time when property values ​​are still falling.

“We are waiting [lending to both owner-occupiers and investors] remain under pressure as stricter lending standards make it more difficult to obtain financing, while falling house prices and historically low rental yields limit the attractiveness of the asset class in general, ”he said. JP Morgan economist Tom Kennedy.

Weak investor lending may also reflect uncertainty about the outcome of the upcoming federal election, including reported changes to housing tax treatment early next year if the Labor Party takes office after the general election in. next Saturday.

“The fall in investor lending was first triggered by changes made by APRA to limit interest-only lending,” said Kristina Clifton, senior economist at the Commonwealth Bank.

“However, more recently, election uncertainty is likely to weigh on investor sentiment.

“If elected, Labor [opposition] promises to remove negative debt and cut the favorable capital gains tax in half on all residential properties except new ones. This will be protected for the existing arrangements. “

As uncertainty over the election outcome will be lifted over the next week, with the value of new homeowner and investor loans continuing to decline, Clifton says the surprise increase in lending recorded in February appears to be a ” an aberration rather than the start of a new trend ”.

Kaixin Owyong, an economist at the National Australia Bank, expressed a similar sentiment after the release of the latest data on housing finance.

“There are few signs of stabilization in the number and approvals of home loans,” he said.

“The outlook remains for a continued downtrend, particularly for investor loans, as a number of off-plan apartments are completed and settled over the next two years.”

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