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Wednesday, 6 May 2020

Lending driven higher by NSW

Lending trends

Chris Joye of Coolabah Capital put his neck on the line in predicting that housing values would either move sideways or drop by no more than 5 per cent from their peak, before resuming their cyclical boom in the second half of 2020. 

In April he'd have been heartened to see a rise in prices for Sydney and a number of other cities, albeit not in Melbourne, where there was some price discounting (especially in the upper price quartile). 

A look back at the March 2020 lending finance figures partly helps to explain why prices have held up to date. 

Total housing lending ex-refinancing was up only modestly on the month, but was some +17.5 per cent higher than a year earlier.

The solid result was driven by homebuyer lending (ex-refi), which was +22.5 per cent higher year-on-year. 

First homebuyer numbers hit the highest level in a decade at a shade under 10,000, driven by first homebuyer incentives and another surge in New South Wales (now some +40 per cent year-on-year). 

Indeed,  the value of owner-occupier approvals to buy existing dwellings hit a record high in New South Wales. 

Every other state and territory except for the NT recorded a modest decline in homebuyer lending for the month of March. 

The Sydney skew meant that the average loan size to buy an existing dwelling hit a record high of $511,000.

Year-on-year loan sizes for the purchase of existing dwellings were up most in New South Wales (+25 per cent) and Victoria (+20 per cent), partly due to a low base effect.  

Construction loans have dropped away sharply now (down -6 per cent over the year for owner-occupiers) as new supply dries up.

And lending figures will inevitably be lower in April as bank phone lines have been like clogged arteries - due to all the refinancing and payment holidays being taken - and processing times have blown out.

But there's also been a very sharp reduction in new stock listings, so it's little wonder prices haven't budged much to date. 

Round 1 to Joye.