Australian borrowers signed on for a record $30.2 billion in home loans in March as property prices skyrocketed

  • The value of new home loan commitments shot to a record high of $30.2 billion in March, the Australian Bureau of Statistics reports.
  • Investor lending spiked 12.8% over the month to $7.8 billion, as Australia’s housing market continued its jaw-dropping run.
  • Loan commitments for housing construction fell 14.5%, as the $2.5 billion HomeBuilder scheme drew to a close.
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Australian homebuyers signed on for a record $30.2 billion in new lending in March, as some housing markets soared to never-before-seen highs.

New data from the Australian Bureau of Statistics (ABS) shows owner-occupiers alone made $22.4 billion of new loan commitments over the month, a 3.3% increase from February, and a 55.6% jump from March 2020 levels.

That outpouring of borrowed cash coincided with a continent-spanning surge in housing prices, which rose 2.8% in March — the highest monthly increase recorded in 32 years.

Beyond rock-bottom interest rates, owner-occupier lending likely took advantage of the Federal Government’s $2.5 billion HomeBuilder scheme, which provided $25,000 grants for eligible new home builds until December 31, and $15,000 grants until April 14.

However, the ABS notes the total value of loan commitments for the construction of new dwellings actually fell by 14.5% over the month, marking the first month-on-month decrease since the scheme was announced in June 2020.

Despite new loan commitments for first home buyers standing 61.4% higher than a year prior, the value of their fresh borrowing fell 0.9% over the month to $6.8 billion.

Not that the HomeBuilder scheme’s gentle wind-down deterred property investors, whose new loan commitments grew to $7.8 billion for the month, a 12.7% spike from February.

“Investor lending has seen a sustained period of growth since the 20 year low seen in May 2020,” Katherine Keenan, ABS head of Finance and Wealth, said in a statement.

“The rise in March is the largest recorded since July 2003 and was driven by increased loan commitments to investors for existing dwellings.”

There are some signs to suggest borrowers could take their foot off the lending accelerator in the months to come.

While home prices continued to grow in April, they shot northward by a comparatively pedestrian 1.8%.

CoreLogic research director Tim Lawless said the gap between house prices and wages is stretching even further, limiting the ability of prospective homebuyers to enter the market.

“With housing prices rising faster than incomes, it’s likely price sensitive sectors of the market, such as first home buyers and lower income households, are finding it harder to save for a deposit and transactional costs,” Lawless said.

But, as the ABS data shows, this particular gravy train will be difficult to stop.

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