The Average New Loan Size for Owner-Occupiers Hits a Record High: What Does This Mean for the Property Market?

The total value of new housing loans rose 3.9 per cent in July to $30.6 billion, according to data released by the Australian Bureau of Statistics.

• The value of new investor loans rose 5.4 per cent to $11.7 billion, which was 35.4 per cent higher than July 2023.
• The value of owner-occupier loans rose 2.9 per cent to $18.9 billion, 21.4 per cent higher than July 2023.
• The value of new owner-occupier first home buyer loans rose 0.8 per cent in July, which was 19.7 per cent higher than July 2023.
• The average new loan size for owner-occupier borrowers reached a record high of $640,998 in July 2024. This represents a significant 8.1% increase from the $593,213 average in July 2023.

Despite the Reserve Bank of Australia's (RBA) clear indications that rate cuts are off the table until the new year, buyers are clearly still prepared to dig deeper into their pockets to secure a piece of the Australian dream.

So, what does this mean for potential buyers, and how does this impact the broader property market?

Let's break down the numbers and explore what’s driving these changes.

A snapshot of the current market

With the average loan size now at $640,998, an owner-occupier with a 20% deposit would be shopping for properties around $801,248 (excluding stamp duty and other associated costs).

According to Canstar's analysis, this isn’t just a Sydney or Melbourne phenomenon; the trend spans across all states:

Average owner occupier new loan size
Region	Amount	Estimated property price (with 20% deposit)	Monthly repayment (6.28%, 30 years)
Australia	$640,998	$801,248	$3,959
NSW	$782,916	$978,645	$4,836
Vic	$616,965	$771,206	$3,811
Qld	$598,857	$748,571	$3,699
SA	$561,027	$701,284	$3,465
WA	$552,435	$690,544	$3,412
Tas	$443,704	$554,630	$2,741
Source: www.canstar.com.au - 6/09/2024. Average loan size per ABS Lending Indicators, based on original terms (July 2024). Calculations assume a 20% deposit size and a 30 year loan term with a rate of 6.28%. Interest rate based on RBA Lenders' Rates (July 2024) for new owner occupier variable loans funded in the month. Excludes stamp duty and other additional costs.

It's clear that despite rising interest rates and inflationary pressures, Australians are still diving into the property market, often taking on larger loans to do so.

The latest Canstar analysis shows that these buyers are committing to estimated repayments nearing $4,000 per month, which is a significant financial burden for many households.

Who's moving the property market needle?

The data isn’t just about loan sizes—it’s also about the surge in buyer activity.

In July, 53,899 new buyers entered the market, a 6.8% increase from the previous month and a staggering 26.2% rise annually.

Interestingly, it's investors who are leading the charge, with a 35.4% annual growth in the number of new loans, indicating that the appetite for investment properties remains robust even in the face of high interest rates.

First-home buyers, on the other hand, continue to struggle.

Although there was a slight 0.8% increase in the number and value of loans to first-home buyers, this segment remains stuck in first gear.

It’s a stark contrast to the booming investor activity, and it highlights the ongoing challenges for those trying to break into the market.

A thriving market despite rate hikes

The total value of lending in July 2024 hit $30.58 billion, the highest since May 2022—marking the beginning of the current rate rise cycle.

It's almost mind-boggling to think that, despite thirteen rate hikes, the market is still pushing forward with such momentum.

As Sally Tindall, Canstar’s Data Insights Director, puts it:

"The value of new lending in July was almost as much as it was before the start of the hikes when the cash rate was just 0.10 per cent."

Investors, in particular, have shown resilience, recording the sixth consecutive monthly increase in the value of new loans.

ABS Lending Indicators - New lending activity
	Jul-23	Jun-24	Jul-24	Difference		% Change
				MoM	YoY	MoM	YoY
Number of new housing commitments (original figures)
Total Housing	42,723	50,470	53,899	3,429	11,176	6.8%	26.2%
Owner Occupied	27,664	31,099	33,513	2,414	5,849	7.8%	21.1%
Investment	15,059	19,371	20,386	1,015	5,327	5.2%	35.4%
Value of new housing commitments
Total Housing	$24.19 billion	$29.45 billion	$30.58 billion	$1.14 billion	$6.40 billion	3.9%	26.5%
Owner Occupied	$15.54 billion	$18.34 billion	$18.88 billion	$531.4 million	$3.33 Also read:This week’s Australian Property Market Update – Latest Data, State by State October 22nd 2024 Also read:Adelaide housing market update | October 2024 Also read:Brisbane housing market update | October 2024 Also read:Auction Report Oct 19th 2024 | More Solid Mid-Spring Weekend Auction Results Also read:Perth housing market update | October 2024 billion	2.9%	21.4%
Investment	$8.64 billion	$11.10 billion	$11.71 billion	$604.8 million	$3.06 billion	5.4%	35.4%
Value of refinancing to a new lender
Total	$21.16 billion	$15.95 billion	$16.64 billion	$685.4 million	-$4.52 billion	4.3%	-21.4%
Owner Occupied	$14.24 billion	$10.08 billion	$10.46 billion	$382.7 million	-$3.78 billion	3.8%	-26.6%
Investment	$6.92 billion	$5.88 billion	$6.18 billion	$302.7 million	-$735.9 million	5.2%	-10.6%
Source: www.canstar.com.au. Based on ABS Lending Indicators, seasonally adjusted figures unless otherwise indicated.

Tips for first-time buyers looking to enter the property market 

1. Expand your search Are you prepared to look further away from work? Would you consider a 1-bedroom apartment instead of a 2-bedder? Recognise that this is likely to be your first property purchase, not your last.
2. Understand who holds the balance of Spring has sprung and so have property listings in some areas. If the number of properties outweighs the number of buyers, you might be able to negotiate on price.
3. Don’t let your home deposit sit idle while you hunt Make sure it’s safe, easily accessible but earning a decent rate of interest that’s ideally over 5 per cent.
4. Maximise your borrowing capacity by reducing the number of credit cards and/or card limits and paying off any existing debts (where possible).
5. Consider Buying your first property as an investor will see you potentially miss out on stamp duty exemptions and grants, however, you could see a major boost to your borrowing capacity if the bank is confident you’ll get a steady source of rent from your property, especially if you’re one of the lucky ones that can live rent-free in the family home.
6. Don’t underestimate the additional Stamp duty and Lenders Mortgage Insurance is the obvious ones but make sure you consider bank fees, legal fees, valuation fees, building and pest report fees, government fees and home insurance. There are also ongoing costs such as council rates, strata fees and water service charges to potentially factor in.