We’ve teamed up with leading economist Dr. Andrew Wilson to bring you the Bluestone Home Loan Market Report!
In this monthly report, Dr. Wilson will take a deep dive into the latest property market data to bring you an overview of the latest trends in home lending, investor activity, home loan values and more.
Home lending highlights for September
Home loans are down across the country, and this looks set to continue
The impact of rising house prices around Australia is starting to become clear with declining affordability slowing down the home lending market. The total value of home loans seasonally adjusted fell by 1.1% percent over July which follows similar declines over June, and with continuing lockdowns, it doesn’t look like things are likely to pick up any time soon.
“ABS home lending declined again over July as soaring house prices continue to constrain the capacity of buyers. Home lending has now fallen over consecutive months for the first time since May 2020 with activity now clearly set to be impacted over coming months by severe covid lockdown restrictions, notably in NSW, VIC and ACT.”
Investor activity is up
We’re seeing an increase in investor activity, although it’s still lower than it has been in the past. NSW and VIC are still the most active states for investors, although VIC reported a 3.0% decline in loan value seasonally adjusted over July.
“Investor activity continues to revive, albeit from a low base, with current lending to this group remaining below long-term average levels. The outlook for investor lending clearly remains positive as this group chases capital growth opportunities without the affordability constraints increasingly confronted by owner-occupiers.”
First home buyer loans are falling in most states
All states reported falls in first home buyer lending over July with the exception of ACT. VIC clearly remains the leading state for first home buyer activity, although loan numbers continued to fall sharply over the month.
“Declining affordability has clearly impacted first home buyers over recent months with low incomes growth constraining the deposit saving required to keep up with sharply rising home prices. The expiration of recent government stimulus policies for first home buyers has also acted to reduce activity.”
The Home Loan Affordability Index is up
The Home Loan Affordability Index uses ABS statistics to measure the proportion of the average income required for the average home loan repayment. When the index is high, it means affordability is low.
According to the most recent figures, the home loan affordability index is currently high, which means general affordability is down. This could potentially have a longer term impact on the growth of house prices.
“The July quarter index reveals another sharp decline in affordability – higher index numbers reveal a higher proportion of the average income required for the average home loan and reflect lower affordability.
The index has now risen above the long-term average for the first time since 2016 and indicates the clear prospect of continuing easing house price growth and declining home loans.”
Want to know more? Read the full report here.