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Demand for housing finance continues to rise

housing finances growth housing finances growth
Reporter 5 minute read

The number and value of owner-occupied dwelling commitments continues to rise month-on-month, with borrowers committing more than $20.2 billion to housing finance in December 2016.

According to new figures released from the Australian Bureau of Statistics, on a seasonally-adjusted basis, there were 54,912 owner-occupied housing commitments made in December 2016, worth a total of $20.2 billion.

The $20.2 billion comprised $1.9 billion for construction of dwellings, $1.1 billion for purchase of new dwellings, $6.3 billion for refinancing of established dwellings and $10.9 billion for purchase of established dwellings. 

While the figures mark a month-on-month increase of 1.3 per cent in the value of owner-occupied commitments, the value is down by more than $1.6 billion (or around 8 per cent) on the same period in 2015.


In trend terms, the number of commitments for owner-occupied housing finance rose 0.1 per cent in December 2016, with the number of first home buyer commitments remaining at 13.8 per cent of total owner-occupied housing finance commitments. However, the number of first home buyer commitments fell by 7.1 per cent to 7,690 in December – down from 8,281 in November.

In trend terms, the value of investment housing commitments rose by 1.7 per cent to $13.21 billion, but on a seasonally-adjusted basis it was down 1 per cent to $13.19 billion.

Speaking of the new figures, Cameron Kusher, research analyst at CoreLogic, said: “Demand for mortgage finance continues to increase over the month reflective of the ongoing growth in home values currently being experienced.

“In December 2016, owner-occupiers committed to $20.2 billion in housing finance which was up from $20.0 billion in November 2016. Although overall demand from owner occupiers is now climbing, it was 3.4 per cent lower in December 2016 than in December 2015… Owner-occupier mortgage demand is largely coming from those purchasing established dwellings while refinancing in is a clear downwards trend having fallen by 14.1 per cent from its peak in December 2015.

Mr Kusher added: “The value of investor housing finance commitment is now just 9.5 per cent lower than its historic monthly peak of $14.6 billion in April 2015. This clearly highlights that the constraints to investors implemented throughout 2015 restricted access to mortgage finance to investors but did little to dampen investor demand which has since rebounded strongly… While demand for mortgages for construction of dwellings eased in December 2016, demand for established investment properties has continued to climb.”


He concluded: “Housing finance commitments are continuing to trend higher, in December 2016 the increase was driven by owner-occupiers rather than investors. Looking more granularly at the data it indicates that commitments for established housing stock have increased while new housing stock waned over the month. With interest rates low and population growth remaining strong, it is anticipated that as we enter 2017, at least initially, demand for housing finance is likely to continue to rise.”

[Related: Three majors well below APRA's 10% cap]

Demand for housing finance continues to rise
housing finances growth
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