Conditions in the Australian housing market continued to heat up in the September quarter, with lending commitments and loan volumes surging. An RBA rate cut in August, following earlier cash rate reductions, looks to have been a key factor. Activity in the investor segment was especially strong, but the owner-occupier segment was also robust. The first home buyer segment will undoubtedly see a boost in the December quarter from the Federal Government's 5% Deposit Scheme. Despite ABS data previously indicating that housing completions slowed sharply - down around 10% through the first half of the year - lending for new stock was especially strong in the quarter.
Housing finance commitments accelerated by 9.6% in the September quarter - the fastest rise seen in 4½ years - to a record high level ($98bn). Although rising housing prices are an affordability constraint for many, demand picked up in the quarter, with loan volumes rising 6.4% (141k) to post their largest increase in more than a year. Demand was supported by the RBA lowering the cash rate by 25bps in August, bringing cumulative easing delivered since the start of the year to 75bps.
Activity in the investor segment was the key driver. Lending ripped 17.6% in the quarter to land at a new cycle peak just short of $40bn. The nation's financial institutions wrote 57.6k new loans to investors in the period - the most on record in a single quarter - to mark a 13.6% increase on the June quarter. As the summary table above shows, activity right across the segment was strong, but notably so in the construction-related area.
Owner-occupier lending increased by 4.7% to $58.2bn, its highest level since the peak in early 2022, on the eve of the RBA's tightening cycle. That increase was more the double the rise seen in underlying loan volumes, which increased by 2% to 83.8k. This leaves a basic interpretation of the effect of rising housing prices, where the pace of lending rose by more than the growth in demand. As with investors, demand for new stock was a key factor.
