The value of new loan commitments for housing fell 4.3% in August 2021 across most states, driven by a 6.6% fall in new owner-occupier loan commitments, according to latest statistics released by the Australian Bureau of Statistics (ABS).
“The value of new loan commitments for owner-occupier housing saw the largest fall since May 2020. Despite this fall, the value of loan commitments was 34 per cent higher compared to a year ago and 53 per cent higher than pre-COVID levels in February 2020.” – ABS head of Finance and Wealth, Katherine Keenan, said
We are starting to cotton on to the fact that states and territories with longer lockdowns will see less demand for owner-occupier properties. Owner-occupier loan commitments were down in NSW by 9.6%, Victoria 4.9% and the ACT 11%. In contrast, owner-occupier loan commitments in Queensland rose 2% and South Australia up 1.8%.
Investors remain active
While owner-occupier homebuyers are taking a break from it all, investors are very much coming back to the market for the sweet rise of property values. For investors, it’s often the profit making that keeps them going.
The value of new investor loan commitments continued to rise 1.5% steadily since October 2020. Increased commitments were seen across most states, particularly Queensland (up 13.6%), Western Australia (up 7.2%) and Victoria (up 1.9%). The state that saw the largest dip of 3.2% was NSW.
Despite the slowing in the rise of housing loans, the annual growth remains extremely high. The current annual growth of 47% down from a peak of 95% in May is still higher than anything in the past two decades.
Through-the-roof house prices
It skates close to the problem many Australians seem to have right now: housing affordability. It has dawned on us that this problem is not going to improve anytime soon. The rest of us are staring at the house prices everyday thinking we may just opt out completely and become permanent renters. Until we start to feel uneasy moving around because deep down we know we want to settle in one place and call it home.
According to Domain’s First Home Buyer Report, it takes a couple six years and a month to save a 20% deposit for a home loan in Melbourne at the entry level price of $631,000. Add another year to that for a home loan in Sydney where the entry-level price is $770,000.
Coupled with stagnant wage growth, many young Australians and casual workers are being pushed further and further away from homeownership. Some are lucky enough to have the bank of mum and dad that gets them into the market while others don’t have that privilege.
Let’s be real here, without change, inequality will grow and it will affect everyone. If the federal government doesn’t do more to balance the housing market such as building more affordable housing and improving tenure security for renters, Australia will see an increase in rising rents, homelessness and highly-indebted homeowners falling behind on mortgage repayments in the near future.