Lending activity to new homebuyers remains strong

The most recent release from the ABS on Lending to Households and Businesses data for November 2021 illuminates the facts on housing finance commitments and confirms that the demand for new homes remains quite strong.

The data shows that the value of loans, excluding refinancing, issued for housing towards the end of 2021 was elevated.

HIA senior economist Nick Ward said the new data revealed the value of loans to owner occupiers increased by 7.6 per cent in the month of November.

“This leaves the value of loans to owner occupiers 46.0 per cent higher in the 12 months to November 2021 compared to the previous 12 months,” Mr Ward said.

“The number of loans to first home buyers increased in November and accounted for 34 per cent of owner occupier loans, this remains above the average of the past decade.”

The number of loans issued to owner-occupiers to construct a new dwelling was up 48.3 per cent in the 12 months to November 2021, compared to the previous 12 months.

The value of loans to investors were 69.5 per cent higher in the 12 months to November 2021, compared to the previous 12 months, as investors respond to the very tight rental markets around the country.

The boom in renovations also looks set to continue with lending for renovations up by 91.4 per cent in the 12 months to November compared to the previous 12 months.

Renovations have become an increasingly popular option for homeowners wanting to increase the size and value of their house.

This demand has been boosted by the grants afforded by the federal government on substantial home renovations, and the lockdowns of 2020 driving people to spend increased amounts of time in their homes.

Renovation activity is likely to remain elevated for a number of years due to the nature of the COVID recession and house price growth.
Victoria’s average renovation approvals were $124,700, higher than the Australian average of $101,100 during 2021.

Of the renovation jobs approved in the Homebuilder-eligible price bracket between $150,000 and $750,000, the national average was $299,900.

Victoria had the highest average renovation in this price bracket ($313,300) followed by New South Wales ($304,700) and Queensland ($301,500).