The value of Australian housing finance commitments lifted by 1% month-on-month in November, extending the rebound from cycle lows in early 2023 to more than 21%. Commitments have climbed through 2023 despite the impact of RBA rate hikes amid strong demand for housing associated with population growth. Much of this demand has been concentrated in the existing housing stock, with the run-rate of new housing completions slowing to decade lows due to capacity constraints and other pressures.
Housing finance commitments increased for the fourth month in succession rising by 1% in November. This was the slowest increase in that sequence; however, it followed a 7.2% surge in October. New commitments totalled $27.6bn for the month, up 21.3% on the cycle low seen in February 2023 ($22.7bn).
In the owner-occupier segment, lending lifted by 0.5%m/m to $17.9bn, a rise of 18.5% from the early 2023 low ($15bn). The upgrader segment was little changed in November (-0.1%) but has been a major driver of the upswing, supported by rising housing prices. CoreLogic recently reported that the median capital city housing price increased by around 9% over the year to December. Construction-related lending (1.4%m/m) has lifted over recent months, though it remains at a very low level ($2.6bn), while loan volumes (4.4k) are down some 66% on cycle highs.
Activity in the first home buyer segment continues to lift. A 2.8% rise in lending to $5.3bn was matched with a 3.5% rise in loan volumes to 10.4k.
Investor lending rose for the 8th month in succession with a 1.9% lift coming through for November. This took the value of lending to the segment to $9.7bn, up 26.5% on the recent low from February ($7.7bn).
Refinancing was broadly stable (0.7%) at $17.5bn in the month. The level is down considerably over the past 12 months (-11.9%) after many borrowers refinanced in 2022 as the RBA hiking commenced. Over the year, owner-occupier refinancing is down 15.5% (and -19.3% in volume terms) while the investor segment by comparison has declined modestly (-3.9%).
