Table of contents
First homebuyers take the baton - featured image
By
A A A

First homebuyers take the baton

The total seasonally adjusted value of housing finance increased by +0.6 per cent to $32.5 billion in October 2017, led by a modest +1.6 per cent increase in investment loans.

34079710_l

Industry data and polled economists had predicted a weak or very weak month for housing loans in October, but it appears that they failed reckon with the strength in non-bank lending, which has begun to kick in quite hard.

In the event there were 55,406 owner-occupier commitments in the month, above even the expectation of even the most optimistic of forecasters.

That makes it 4 consecutive months with more than 55,000 commitments, showing that home loan demand remains strong.

Of the mainland states, Victoria has by far the strongest homebuyer market.

image-1

Average loan sized are creeping up again for non-first homebuyers at $380,300, up from $370,900 a year earlier, but have stalled for first homebuyers as serviceability constraints bite.

image-2

Investment lending ticked up a little in October too, but drilling the trendlines through the figures to smooth out the noise shows that the total value of investor activity is about 6 per cent lower than a year earlier.

Piecing it all together, total housing finance has been pretty robust, coming it at a solid $32.8 billion in trend terms - if there's been any cooling in the market, it may relate as much to muffled overseas investor interest as it does to the domestic market.

image-3

Moody's reported that it expects to see only a moderate increase in mortgage delinquencies in 2018, and this appears to be borne out by these figures, with refinancing activity some 11 per cent lower year-on-year.

Financing for new dwellings is tracking at extremely high levels, with the trend result hitting the highest level since Boney M was at number 1 in Australia with Rivers of Babylon in July 1978.

image-4
Ye-ah, we wept.

First homebuyer takeover

First homebuyers accounted for 17.6 per cent of finance commitments, up from 17.4 per cent in September, with lending to first homebuyers up by a thumping 38 per cent over the year as government incentives draw in new buyers.

image-5

There has clearly been a sharp increase in first homebuyer activity in New South Wales and to a somewhat lesser extent Queensland.

But it's Victoria that's really driving the way forward, with its 3,250 financing commitments being the highest monthly result since 2009.

image-6

That's upbeat news for turnover in Melbourne, Geelong, and some other regional housing markets in Victoria.

The wrap

Overall, a solid result, in terms of both the volume and value of housing finance written.

So it looks as though 2018 will kick off with the now-familiar "surprisingly resilient" articles.

About Pete is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. Using a long term approach to building businesses, investing in equities, & owning a portfolio he achieved financial independence at the age of 33. Visit his blog
No comments

Guides

Copyright © 2024 Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts