Investor loans surge as housing demand grows

New figures from the Australian Bureau of Statistics (ABS) show lending for housing grew in August 2024, with property investors leading the way.

Attracted by high rents and good rental yields fuelled by still strong population growth, investors have piled into property over the last year, with the ABS figures showing Queensland is a favoured destination.

The details

The ABS says in August 2024, the total value of new loan commitments for housing rose 1.0% to $30.4b in seasonally adjusted terms.

It follows a rise of 3.5% in July.

Lending indicator figures show owner-occupier housing loans rose 0.7% to $18.7b and were 16.8% higher compared to a year ago, a good indicator of more buyer confidence in the real estate markets.

But again, the big jump was seen in investor loans for housing.

They rose 1.4% to $11.7b and were 34.2% higher compared to a year ago.

“Investor demand continues to approach a new record,” says Maree Kilroy, Senior Economist, Construction & Property Forecasting at Oxford Economics.

Ms Kilroy says the ABS figures also highlight the growth in investor interest in Queensland.

“The impressive strength of demand for investment properties in the Sunshine State saw loans rise 7.9% to $2.74 billion – a level now 18% above Victoria,” she says.

While national growth in owner-occupier demand for loans was muted at just 0.7%, Maree Kilroy points out that Queensland (+2.6%) is also the star performer in that category.

Overall, growth in new lending to investors and owner-occupiers in Queensland has seen the Sunshine State move ahead of Victoria for the first time since 2009.

The ABS figures also show some hopeful signs for the beleaguered residential construction industry.

“Consistent with the recent momentum in building approvals for houses, the number of loans for the construction of dwellings increased 1.5% nationally to sit 11.1% higher than this time last year,” Ms Kilroy says.

Softer overall price growth, with more focus on affordable markets

Confirming recent evidence that some markets where there’s been strong home price growth might be tilting in favour of buyers, Oxford Economics Maree Kilroy notes, “the deceleration in price growth is broadening.”

CoreLogic’s latest monthly Home Value Index release noted that nationally, the “pace of growth

is showing clear signs of slowing, with the quarterly increase in national home values (1.3%) now less than half the rate of growth in the same three month period of 2023 (2.7%).”

Rival data analytics firm PropTrack also noted in its September 2024 Home Price Index report that “growth has slowed with buyers enjoying more choice.”

“Advertised stock is running ahead of demand in several markets,” Maree Kilroy says.

The other factors at play are sustained high interest rates (the Reserve Bank of Australia has left interest rates at a 13-year high of 4.35% since last November), cost of living pressures, weak consumer sentiment and affordability constraints limiting loan sizes.

“Affordability pressures are pushing buyers towards lower priced properties,” Oxford’s Maree Kilroy says.

“This is evident in the lower quartile price bracket holding up, quarterly unit price growth finally outpacing houses and the faster pace of growth seen by the mid-tier cities (Brisbane, Adelaide and Perth).”

“Following a 7.5% lift in the median combined capital city house price in FY2024, we now expect notably softer growth over FY2025, with interest rates likely on hold until June quarter 2025,” she says.