Australian housing finance commitments have continued to rise seeing a 1% gain in August (in line with consensus) to be up for the 7th month in succession. Lending to both major segments advanced: owner-occupiers 0.7% and investors 1.4%. Supply-demand dynamics are pushing up housing prices - higher interest rates notwithstanding - as a significant volume of homes remains tied up in the construction pipeline. This is driving increased lending and the associated credit growth.
The suite of indicators released this week have underscored the strength of housing markets across the nation, despite the effects of higher interest rates. CoreLogic reported a 1% rise in the national median housing price over the most recent quarter to $807k, up 6.7% on a year ago. Housing credit growth has expanded alongside this at a 5%yr pace to August according to the RBA. Today's data from the ABS showed a further 1% rise in lending commitments to $30.4bn in August. Commitments are now 31.5% above the cycle low in January 2023, up 23% over the past 12 months.
Commitments to owner-occupiers saw a 0.7% rise ($18.7bn) in the latest month. Although lending to upgraders (existing home buyers) increased (0.5%), underlying loan volumes declined (-1.1%) - pointing to the impact of rising housing prices. Meanwhile, construction-related lending was down 0.6% month-on-month, with loan volumes also soft (-0.5%). The first home buyer segment saw lending drop 0.4% on the prior month on a 1.5% decline in the number of loans written.
Investor lending is pressing record highs following a 1.4% rise in August to $11.7bn, now only a touch below the previous peak ($11.8bn) in January 2022. Lending to the segment troughed early last year ($7.8bn) but has since surged as rising rents amid very low vacancy rates and increasing housing prices have encouraged investors.
