New home loan values continue to fall: ABS

The ABS reported an 8.5 per cent fall in the value of new home loan commitments for housing, dropping to $28.4 billion in July 2022 following a fall of 4.4 per cent in June.

New owner-occupied loan commitment values fell in all states with the exception of the Northern Territory, which rose by 3.1 per cent.

Borrower refinancing of owner-occupied housing loan commitments values between lenders also fell by 1.9 per cent in July 2022, down to $12.4 billion on the back of a record high that was reached in June 2022.

The number of new loan commitments to owner-occupier first home buyers fell to its lowest number since May 2019, recording a 10.7 per cent fall in July 2022 to 8,388.

Once again, these falls were recorded in almost all states and territories (excluding NT), particularly Queensland, Victoria and NSW that recorded falls of 18.8 per cent, 12.6 per cent and 11.6 per cent respectively.

ABS head of finance and wealth Katherine Keenan said: “The value of new owner-occupier loan commitments fell 7.0 per cent in July 2022, while new investor loan commitments fell 11.2 per cent.

“Although lending has fallen from historically high levels recently, the value of loan commitments remained significantly higher than pre-pandemic levels.

“Owner occupier loans in July 2022 were 40 per cent higher than February 2020, while investor loans were 78 per cent higher.”

Tom Devitt, economist for the Housing Industry Association (HIA), further stated that the 4.0 per cent fall in loans for construction and new house purchases “highlight the impact of the recent increases in the RBA’s cash rate”.

“The rise in the cost of borrowing is compounding the impact of the rapid increase in the cost of building a new home that occurred due to the constraints on global supply chains,” Mr Devitt added.

“Declines were seen across all segments of the market, led by investors.

“New home sales across Australia declined by 13.1 per cent in July, following even earlier reports from the industry of a slowing in the number of groups visiting display sites. This will see weaker sales volumes in the second half of 2022.” 

Earlier this year, the value of housing loan commitments for the month of April was just shy of $31 billion, falling 6.4 per cent when compared to the previous month, affirming earlier predictions of a cooling housing market.

[RELATED: New home loans sink across board over April: ABS]

Written by Adrian Suljanovic

Last Updated: 01 September 2022

Published: 02 September 2022