Investor lending continues to outperform owner-occupiers

The lending indicators data has been released for the month of June. Each area of lending witnessed an increase, contributing to the growth trends experienced throughout 2024.

Broken down, new loans:

• Increased 1.3 per cent for housing.
• Increased 1.1 per cent for personal fixed term loans.
• Increased 4.5 per cent for business construction and rose 1.5 per cent in trend terms.
• Increased 3.4 per cent for business purchase of property and rose 0.8 per cent in trend terms.

The value of new housing loans hit $29.2 billion throughout the month. Investors saw more growth, with the value of their loans climbing 2.7 per cent to $11.0 billion. Meanwhile, the value of new owner-occupier loans grew by 0.5 per cent to $18.2 billion.

“Investor lending growth continued to outpace the growth of owner-occupiers in June. The total value of new investor loans was 30.2 per cent higher compared to a year ago, while for owner-occupiers it was 13.2 per cent,” said Mish Tan, ABS head of finance statistics.

“Over the past 12 months, NSW continued to have the highest average loan sizes for both owner-occupiers and investors. In June, it rose to $780,000 for owner-occupiers and $818,000 for investors.”

The picture painted by the data is that of heightened activity, said Housing Industry Association (HIA) economist Maurice Tapang.

“Various segments of the housing market are increasingly active, with lending to first home buyers, owner-occupiers, and investors increasing in the first half of 2024. The number of loans issued for the purchase and construction of a new home has been steadily increasing since the start of 2024, from a very low base,” Tapang said.

“Market confidence appears to be stabilising following nine months without a change in interest rates. The number of loans issued for the purchase or construction of a new home increased by 9.2 per cent in the June quarter 2024 compared to the previous quarter.”

He continued: “This quarterly increase was broad-based, with all states recording more loans issued for new homes in the June quarter 2024 than in the March quarter. This increase in lending is partially driven by a return of first home buyers to the market. The number of loans issued to first home buyers in the June quarter 2024 was 5.8 per cent higher compared to the March quarter. This suggests that building activity is at, or near, the trough in this cycle.”

Coinciding the lending indicator release was a look into the rising costs of building materials. While there’s still growth happening, thankfully, the immense increases during the pandemic are subsiding.

“Following record-high increases in the cost of building materials, the ABS has reported that price growth has returned to well below the pre-pandemic rate. Prices of home building materials rose by 1.1 per cent in the year to June 2024. This is around half the rate of increase seen in the decade prior to the pandemic,” Tapang said.

[Related: Are high interest rates ‘outstripping growth’ in home lending?]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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