New Loan Activity Up in 0.2% in March


Confirming the earlier view that the Australian housing market (pre COVID 19) was showing green shoots, March saw the value of loans for new purchases lift 0.2% compared to the prior month. Those green shoots were positive, but to underscore just how significant, at $19.444 billion, loans were 17.5% higher than in March 2019, with First Home Buyers still strong in the market, accounting for 18.6% of the total.

Examining the first chart, we can see that recent months have experienced a plateau in monthly financing (shown in green). Overall, we can also see that the Owner Occupier loans (shown in blue) have driven the recent experience, while the loans to investors (shown in red) have declined.


Fig. 7

To go straight to the dashboard and take a closer look at the data, click here.

Investors accounted for 26.5% of total loan value in March, coming in at $5.100 billion, down 2.5% on February and declining for the third successive month. Investors had their cue in the rack in the first quarter of 2020 and we can be certain, the same will be the case for the June quarter.

Although they are included in the total number for owner-occupiers, the value of loans to First Home Buyers has continued to track up. In March, the value of loans rose for the seventh successive month, to hit $4.210 billion, a rise of 2.5% on the prior month and tracking towards decadal highs. The chart below shows the details for First Home Buyers.


Fig. 8

To go straight to the dashboard and take a closer look at the data, click here.

When we look back on this data in months to come, it may well be with a sense of nostalgia and longing for what were really looking like solid recovery numbers. At least most of this finance will result in actual building work: and that’s a small blessing. But that said, with UBS, CoreLogic and others all reporting an expected 10% drop in the average price of houses, we may see a higher than normal proportion of that finance be reconsidered. Nothing certain, but that seems possible.