New Loan Commitments Continue to Grow

Despite the pandemic still hanging around creating intermittent havoc, the Australian property market remains resilient, continuing to break records and defying the logical premise of instability one would have predicted when the COVID lockdowns commenced in 2020.

The latest information from CoreLogic, sourced from the Australian Bureau of Statistics (ABS) – reveals the total value of new loan commitments for housing grew for the seventh consecutive month and shows no sign of slowing down; reaching record heights in December 2020, rising 8.7% to $19.9 billion, a whopping 38.9% higher than pre-COVID-19 December 2019.

Head of Finance and Wealth at the ABS, Amanda Seneviratne said, “Loan commitments for existing dwellings accounted for 53 percent of December’s rise in owner-occupier housing loan commitments, while construction of new dwellings accounted for 32 percent.”

“The value of construction loan commitments grew 17.1 percent in December, more than doubling since the June implementation of the HomeBuilder grant. Federal and state government measures, such as HomeBuilder, and historically low-interest rates are supporting ongoing growth in housing loan commitments.”

Head of the REIA (Real Estate Institute of Australia), Adrian Kelly said the figures reaffirm the strength of the Australian housing market, and point to a buoyant outlook from investors, first-home buyers, and owner-occupiers.

“The figures are no surprise to us, as they support what our members were experiencing ‘on the ground’ during 2002, which was completely at odds to some of the negative forecasting that was taking place.”

Whilst the economic impact of the changes to government benefits commencing in March are yet to be experienced, CoreLogic remains confident, reporting that they believe house prices will continue to rise this year.

CoreLogic reported that housing values continued to rise in January with their home value index up 0.9% over the month. Housing values have surpassed pre-COVID levels by 1.0%, and the index is 0.7% higher than the previous September 2017 peak.

According to CoreLogic, every capital city and broad rest-of-state region recorded a rise in housing values over the month, ranging from a 2.3% surge across Darwin to a relatively mild 0.4% rise in Sydney and Melbourne.