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Home loan affordability slumps as prices surge: October home lending report

Bluestone home loan report

Our October report from Dr. Andrew Wilson is here! This month it looks like once again we’re facing a sharp decline in affordability with a higher proportion of the average income needed for the average home loan.

“Recent declines in home lending reflect falling affordability as soaring home prices increasingly act to sideline buyers. The expiration of various government demand stimulus policies, particularly for first home buyers and new home building, together with the gradual satisfaction of pent-up demand has also acted to reduce home lending.” – Dr. Wilson



Other home lending highlights

The impact of lockdowns is already weakening home loan markets

As a result of Covid lockdown restrictions, home lending activity has fallen over three consecutive months for the first time since lending restrictions slowed down the housing market in 2018. The lockdown has reduced buyer activity and added to the reduction in demand. 

“Most states reported declines in home lending over August with the lockdown states of NSW, VIC and ACT predictably recording significant falls. The August result was the steepest fall since the introduction of similar lockdown constraints impacted home lending in May 2020.

QLD was the only state to record an increase in home lending over August reflecting the ongoing strength of the local market driven particularly by continuing relatively strong migration.” – Dr. Wilson

Owner-occupier lending is down, but investors are rising

Owner-occupier market share is at the lowest it’s been since June 2018 but the total residential loan market share for investors is steadily increasing. Investor market share is now at its highest level since June 2018. 

“Investor activity continues to rise, with the August increase of 1.5% being the tenth consecutive monthly increase in lending.” – Dr. Wilson

Want to know more? Download the full report here.

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