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The value of investor loans totalled $11.7 billion in July 2024, according to the ABS, just shy of the $11.8 billion record high achieved in January 2022.
New figures from the Australian Bureau of Statistics (ABS) have revealed that investor lending activity continues to outpace that of owner-occupier growth.
According to the Lending Indicators data for the month of July, national home loan commitments (excluding refinancing) rose 3.9 per cent in July 2024, to $30.6 billion in seasonally adjusted terms. Over the past year, new mortgage lending has grown by 26.5 per cent, fuelled by the lift in home prices.
Of this, $11.7 billion was for investor loans – near record highs.
In fact, the value of new investor loans rose 5.4 per cent over the month, outpacing that of owner-occupier lending, and was up 35.4 per cent when compared to July 2023.
Noting the figures, Mish Tan, the ABS’ head of finance statistics, said: “Investors have continued to see the largest growth in new loans over the past year, increasing more than a third in value since July 2023, from $8.6 billion to $11.7 billion. This is close to the record high of $11.8 billion reached in January 2022.
“The increased investor activity we’re seeing in the lending statistics is mostly because more loans are being approved, and is only partly driven by higher dwelling prices.” (However, the ABS does not release data on the number of investor loans approved.)
According to Maree Kilroy, senior economist for Oxford Economics Australia, the “very tight rental market and higher gross unit rental yields” are helping to stoke investor demand, while the spread between owner-occupier and investor mortgage rates has “also progressively tightened”, with banks competing for market share.
Nationally, the average size of new owner-occupier loans and new investor loans reached the same record high of $641,000 in July.
However, owner-occupier lending activity has not risen at the same pace as investor lending.
The value of owner-occupier loans rose 2.9 per cent to $18.9 billion in July 2024, which is 21.4 per cent higher than in July 2023.
Queensland increased by 6.6 per cent, followed by South Australia and Victoria, both up 2.8 per cent.
But first home buyer (FHB) activity rose only marginally, with the value of new FHB loans growing by just 0.8 per cent in July.
Despite this, the value of FHB loans was still 19.7 per cent higher than it was in July 2023, even though interest rates were lower then.
Indeed, a total of 9,991 FHB loans were written in July, in seasonally adjusted terms, 12 per cent more than the 8,857 FHB loans written in the same month the year prior. FHBs made up 35.4 per cent of the overall home buying market in the month of July, above the historical average of 30 per cent.
Many first home buyers have been brought into market by the Home Guarantee Schemes (the First Home Guarantee, Family Home Guarantee, and Regional First Home Buyer Guarantee) with recent Housing Australia statistics showing that around one in three first home buyers – or 43,800 – were supported by the government guarantee scheme in the financial year 2024.
Speaking to The Adviser’s Elite Broker podcast recently, Sydney-based broker Dylan Salotti of Divitis Finance said that investor activity had been strong recently, particularly for those investing through self-managed super funds (SMSFs).
He said: “I think as a whole, first homebuyer market is a bit quiet still. I think there’s just generally with the cost of living, particularly us in Sydney as well, there doesn’t seem to be the same eagerness to get into the market for the moment, which is really interesting, that is...
“But for us, what we’ve been seeing, is a lot of self-managed super. Investors that perhaps have been tapped out of the ability to borrow in their personal names for the moment, a lot of these investors actually go into self-managed super. It was an area that sort of went pretty quiet there for a while and I think it’s really bounced back...
“[I]t’s actually quite a good opportunity and it usually leads onto a more sophisticated clientele that is maybe perhaps more active moving forward. So it’s certainly an area that we have learnt to love.”
Maurice Tapang, economist at the Housing Industry Association (HIA), said that he expected both investor and owner-occupier flows to increase in the near future.
Tapang said: “As is expected, investors are the first segment of the market to return as they see through the macro-dynamics of house price growth and rising rents.
“It is expected that owner-occupiers will follow suit, which will see more of them flow into the new home market amid a return of confidence and certainty with build costs and time frames.”
[Related: Investor lending drives up new housing loans in June]
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