Owner-occupier housing loan commitments are at record-high levels, driven by low interest rates and incentives such as the HomeBuilder grant, according to the ABS.
The Australian Bureau of Statistics’ (ABS) latest Lending Indicators data has revealed that the total value of home loan approvals (seasonally adjusted) rose 5.9 per cent in September.
This rise was driven by a surge in the value of owner-occupier home loan commitments, which jumped 6.0 per cent to $17.3 billion in September.
Around half of the rise in September’s owner-occupier housing loan commitments was for the construction of new dwellings, which surged 25.3 per cent, following a 19.2 per cent rise in August.
The number of loans for the construction of new owner-occupier dwellings increased by 27.1 per cent over September to 5,948, while the total number of dwelling approvals rose by 15.4 per cent to be 8.8 per cent higher than a year ago.
Commenting on the trends, ABS head of finance and wealth, Amanda Seneviratne said: “Owner-occupier housing loan commitments are at historically high levels, consistent with low interest rates and government incentives.”
“For example, it is likely that the HomeBuilder grant is contributing to increased demand for construction loans.”
Across the states, only Victoria and Tasmania recorded lower home loan commitments, according to the ABS.
Victorian owner-occupier approvals fell 8.8 per cent in seasonally adjusted terms, which the ABS said reflected restricted housing market activity in July and August when COVID-19-related stage three and stage four restrictions were imposed.
“The fall in commitments for existing dwellings in Victoria was partly offset by a rise in commitments for construction of new dwellings,” Ms Seneviratne said.
In the first home buyer (FHB) segment, the total number of owner-occupier FHB loan commitments rose 6 per cent, reaching 13,040 loan commitments, seasonally adjusted.
As a share of owner-occupier new loan commitments, the value of FHBs rose 5.6 per cent to $5.3 billion.
Meanwhile, the total value of loan commitments for investor housing was $5.3 billion, an increase of 5.2 per cent.
According to ABS data on Building Approvals, the number of dwellings approved rose 15.4 per cent in September (seasonally adjusted terms).
ABS director of construction statistics Daniel Rossi said the rise was driven by private sector dwellings excluding houses, which rose 23.4 per cent, while private sector houses rose by 9.7 per cent in September, the third consecutive monthly increase.
"The September results indicate continued demand for detached housing following the relaxation of COVID-19 restrictions in most states and territories. A range of Federal and state-based incentives are also providing support for the housing sector,” Mr Rossi said.
Dwelling approvals rose in Western Australia (42.6 per cent), South Australia (28.3 per cent), Queensland (19.3 per cent), Tasmania (18.8 per cent), Victoria (12.4 per cent) and New South Wales (4.6 per cent).
Approvals for private sector houses rose in South Australia (19.9 per cent), Western Australia (15.1 per cent), Victoria (9.7 per cent), New South Wales (7.3 per cent) and Queensland (3.6 per cent).
Housing Industry Association (HIA) chief economist Tim Reardon said the data has confirmed the surge in building work entering the pipeline and added that it is consistent with HIA’s data on new home sales over recent months.
“Based on the strength of new home sales in September, we expect finance approvals and building approvals to continue to be strong next month, before the positive impact of HomeBuilder starts to slow,” Mr Reardon said.
“These high volumes of sales, loans and approvals following the announcement of HomeBuilder will be relatively short lived. HomeBuilder was designed to provide consumers with confidence to return to the detached housing market. It has been very effective at achieving this goal.
“This new work entering the pipeline will offset the significant declines observed from March as restrictions were announced and will ensure a stable supply of new building projects over the next nine months.
Speaking of the ABS data, assistant treasurer Michael Sukkar said: “Across the board the construction industry is saying that HomeBuilder is delivering for Australia’s tradies and home buyers, which is driving stimulus in the economy at a time it’s needed most.”
“These latest resounding results demonstrate yet again that the Morrison Government’s HomeBuilder programme is delivering the right support to our vital construction industry.”
Denita Wawn, CEO of Master Builders Australia, observed that new home building activity had been in the "advanced stages of downturn" even before the COVID-19 crisis, and added that the introduction of the HomeBuilder grant has revived the market.
“The recovery in residential building will benefit the whole economy. Every $1 million in residential building activity supports nine jobs right around our economy,” Ms Wawn said.
“The upturn generated by HomeBuilder is helping claw back some of the jobs lost as a result of the pandemic.
“Extending HomeBuilder until the end of 2021 will maximise the benefits of the scheme. It will mean the renewed momentum in the housing market to reach its full potential over the course of next year and provide even more benefits to our whole economy in terms of restoring employment.”
The value of total building approved fell 17 per cent in September (seasonally adjusted terms).
The value of non-residential building fell 36.7 per cent, driven by the public sector, following a strong August result.
The value of total residential building fell in September (0.7 per cent), which included a 1.0 per cent fall in new residential building, and a 1.1 per cent rise in alterations and additions.
Big 4 banks’ mortgage portfolios
The ABS data has come on the heels of figures released by the Australian Prudential Regulation Authority (APRA), which has once again revealed the gap in the performance between the major banks in their mortgage portfolios.
For the third month in a row, ANZ and the CBA have recorded multibillion-dollar mortgage portfolio growth while the other two major banks have reported a contraction
The mortgage portfolios of ANZ and the Commonwealth Bank of Australia (CBA) posted a combined total growth of around $5.3 billion over September, driven by an increase in owner-occupier lending.
In contrast, both National Australia Bank (NAB) and Westpac reported contractions in their mortgage portfolios, decreasing by $700 million each over September.
The APRA data has followed the October 2020 State of the States report from CommSec, which showed that housing finance commitments have reached above decade averages across Australia, while beating last year’s levels.
[Related: Mortgage approvals soar to new heights]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.
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