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Lending rates level out


Lending rates level out

Latest official data shows owner-occupier and investment loans picked up in August.

Lending has returned to pre-pandemic levels among home buyers who are planning to live in the property.

Owner-occupier loans are still well down from a peak in January 2021 when the real estate market was booming.

Australian Bureau of Statistics data for August revealed a 2.5 per cent lift in new owner-occupier loan commitments for dwellings over the month.

New loans for this cohort were still 12.3 per cent lower compared to the same time last year.

Lending by property investors also ticked up over the month, improving 1.6 per cent, but remained three per cent lower than 12 months prior.

The pick-up in lending comes as a recovery in home prices continues, with national values as tracked by CoreLogic up 0.8 per cent in September, from 0.7 per cent in August.

National home prices are now just 1.3 percentage points shy of the record levels reached in April 2022.

The ABS also released latest building approvals data last week. The August dataset showed building applications approved by government lifted seven per cent, which followed a 7.4 per cent fall in July.

The improvement included a 5.8 per cent lift in private sector houses, which followed three months of stable movements.

Oxford Economics Australia senior economist Maree Kilroy says home approvals have probably found a floor but remain at low levels.

New dwelling starts are likely to slide below 150,000 this financial year, she says.

“The mix of higher interest rates, delays and rising build costs have made it a challenging environment for new home buyers and developers alike,” she says.

Record migration  helping to support markets for established homes, fuelling growth in rents and home prices.

“For new dwellings however, the relay of this will take a few years to play out.”

Commonwealth Bank economist Stephen Wu says dwellings approvals are near record lows if considered on a per capita basis, with the building slowdown coinciding with a sharp uptick in population growth.

“We anticipate this weakness will continue for the remainder of 2023 before more favourable economic conditions stimulate the sector next year,” he says. –AAP.

price growth jump forecast

Hotspotting director Terry Ryder says the spring edition of The Price Predictor Index indicates the rate of price growth in cities and regional markets across Australia is likely to accelerate in the wake of major uplifts in sales activity in many locations.

“The previous edition recorded the first signs of recovery, but this spring survey shows a dramatic upturn in the revival momentum in most market jurisdictions in Australia,” Mr Ryder says.

“Without question, recovery and resurgence are the dominant themes with seven out of 10 locations in the nation now having positive sales activity trends – a massive improvement.”

Mr Ryder says some media outlets have perpetuated the myth that the exodus of population to the regions was caused by Covid 19, when the trend has been underway for much longer.

“We’ve seen multiple headlines suggesting that demand in regional markets has collapsed and that prices are no longer rising,” he says.

“Our analysis refutes that.

“Regional markets remain strong and indeed we have recorded significant upturn in buyer demand in the regional areas of the eastern states.”

New South Wales, Victoria and Queensland all recorded big turnarounds in buyer demand in the spring survey of sales activity.

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