Investors lead the charge in buoyant Australian market

Keen observers of real estate often use trends in home loan applications as a predictor for the short-term performance of property prices.

New data from the Australian Bureau of Statistics for May indicates Australia is having a strong winter ahead of an anticipated busy spring selling season.

Significantly, the data illustrates that while there may be fewer buyers right now, those in the market are prepared to spend more money. 

Three states are enjoying particularly strong price growth – South Australia, Queensland and Western Australia.

The total value of all types of loan commitments is up 18% compared with May last year.

Since then, the value of new loans to investors has trended upwards across most states and territories, too. The largest rises have been in NSW (+24.8%), Queensland (+48.2%) and Western Australia (up 73.9%), according to the ABS data.

In May, the value of new loans to investors in Queensland reached an all-time high of $2.4 billion, exceeding Victoria for the third consecutive month.

The ABS attributed this to investors taking out larger loans on the Sunshine State compared with this time last year. 

ABS head of finance statistics, Ms Fiona Cotsell, said: “We saw the average loan size for investors in Queensland increase by 14.3% since May 2023, from $508,000 to $580,000. Comparatively, the average loan size in Victoria fell 3.2%, from $584,000 to $566,000.”

The ABS said the total value of loans for newly-built housing fell 1.7% in May to $28.8 billion.

Owner-occupier loans (excluding first-home buyers) fell 1.6% to $12.9 billion, while first-home buyer loans fell 2.9% to $5.2 billion.

Ms Cotsell said: “Despite the falls seen across all types of buyers in May, the value of new home loan commitments has still risen 18% over the past 12 months. 

“Loans to investors have continued to see stronger growth than owner-occupiers.”

Other key highlights of the ABS report:

  • Loans for total housing fell 1.7% to $28.8b, after a rise of 4.8% in April. It was 18% higher compared to a year ago.
  • Investor residential loans fell 1.3% to $10.7b in May compared to April but were 29.5% higher than last May.
  • Total housing refinance deals dropped 0.7% to $16.2b in May – down 22.2% year-on-year. This is a sign of owners being able to handle their mortgage commitments.