Investors drive a continued climb in housing loans

The value of new home loans has continued to rise, albeit at a reduced rate, fuelling expectations of higher property prices this year.

The value of new home loans has continued to climb.

The value of new home loans continued rising in November, albeit at a reduced rate, fuelling expectations 2024 will see higher property prices despite the fastest interest rate increases in generations.

Home loan values excluding refinancings rose 1.0 per cent in November, led by 1.9 per cent growth in investor lending commitments that pushed total annual growth to 13.1 per cent, the fastest housing lending pace in almost two years.

Official statistics show the increase in November follows an upwardly revised 7 per cent jump in commitments in October – from 5.4 per cent previously – the sharpest increase since January 2021. The move is consistent with expectations of a resilient property market this year and a soft landing for the economy.

“We expect housing price growth of around 6 per cent in 2024, reflecting strong auction clearance rates, limited listings and the sluggish flow of new residential building approvals and construction,” ANZ senior economist Adelaide Timbrell said.

Property prices rose 8.1 per cent in 2023, led by gains in Perth, Brisbane, Adelaide and Sydney.

The ongoing lift also “lays to the view of financial conditions not being especially restrictive from the perspective of new lending demand”, head of NAB market economics Tapas Strickland said. “In terms of flow through … housing momentum if sustained would act to support consumer spending in 2024, adding to notions of a soft landing.”

New owner-occupier loans grew by 0.5 per cent or an annual rate of 10.6 per cent, largely driven by a rebound in lending to first-home buyers who are mostly buying existing dwellings.

“The uptrend … is consistent with rising turnover in the housing market. An increase in new listings is adding to the available housing stock,” Commonwealth Bank economist Stephen Wu said.

He said the Reserve Bank’s 0.25 percentage point increase to the cash rate to 4.35 per cent in November would have reduced home borrower capacity, but “sales volumes have increased, with strong population growth and more active foreign buyers supporting the market.”