Home Loan Approvals Show Strong return for Owner Occupiers

17 December 2019

New figures from the ABS shows that new loan commitments rose during October but levels remain below the peak in March 2017.


Total new loan commitments for housing grew 2.0% on last month to $18.2bn and are tracking just 0.9% above the same period last year, but 15% above the recent low point in May 2019 .


Cuts in the official cash rate by the RBA and improvements in credit conditions and in the confidence of the market have particularly assisted the owner occupier market. Lending to Owner Occupiers improved in October with a 2.2% rise on September and a 5.7% rise above the same period of last year.


Investors on the other hand continue to struggle to find credit or confidence to lend. Whilst new loans to investors rose 1.7% on last month, they are down -9.7% on the same period last year.


The majority of new lending for investment has historically been directed towards apartments, and most of that toward off the plan sales, however it will be some time before confidence returns to the apartment investment market.


The off the plan market will need;

  • greater certainty on quality control through the construction process,
  • improved buyer protections on defects,
  • more confidence in the rental market,
  • confidence that values will increase and
  • confidence that funding will be available on completion.


Development groups who can overcome these buyer concerns will be in the best position to advance new projects. Until then, developers will likely concentrate on house & land developments and smaller townhouse developments.