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What data informed these insights
The Australian Bureau of Statistics (ABS) regularly release data on housing finance. The data show that the number and value of loans for housing in Victoria is at all-time highs.
Residential building approvals and housing finance data show demand for housing is apparently greater than ever.
Learn more about housing demand though building approvals.
Demand for housing insights article
Home loans are at all time high
In Victoria there was a sharp increase in the value of home loans in the six months from October 2020 to April 2021. The total value of loans increased by over 60 per cent from around $5.3 billion in October to $8.7 billion in March. The value of loans then dropped to $8.5 billion in April.
Figure 1: Monthly value of loans to households for residential purposes (ex refinancing), Victoria ($billion)
Source: Lending Indicators, ABS
Much of this increasing demand for housing finance is from changeover owner occupiers. These are owner occupiers who are not first homebuyers.
Changeover owner occupiers tend to have more significant assets than first home buyers and can bid up prices of homes – particularly for existing dwellings in well serviced locations with good access to transport and jobs.
The value of loans to changeover owner occupiers increased from $2.7 billion in October 2020 to $4.4 billion in April 2021.
The value of loans to first home buyers increased rapidly from around $1.4 billion in October 2020 to $2.3 billion in December 2020. The value of loans then dropped to around $2 billion in April 2021.
The value of loans to investors increased from $1.2 billion in October 2020 to $2.1 billion in April 2021. This was slightly more than the value of loans to first home buyers.
Most investment is towards existing homes
The value of loans that were for the purchase of new dwellings (or the construction of new dwellings) nearly doubled from $1.1 billion in February to around $2 billion in December 2020. It then fell to $1.8 billion in April 2021.
But loans for the purchase of existing dwellings increased much more. They nearly doubled from around $3.1 billion in October 2020 to $6.1 billion in April 2021.
Figure 2: Monthly value of loans to households (ex refinancing) by dwelling type, Victoria ($billion)
Source: Lending Indicators, ABS
Changeover owner occupiers are investing in existing homes
The value of loans to owner occupiers buying existing homes nearly doubled from around $2.3 billion in October 2020 to $.5 billion in April 2021. Similarly, the value of loans by investors for existing homes doubled from $0.8 billion in October 2020 to around $1.6 billion in April 2021.
The value of loans for owner occupiers buying new dwellings also increased by a similar proportion over the year. The value of loans doubled from around $0.8 billion in February 2020 to $1.7 billion in December 2020 before moderating to $1.4 billion in April 2021.
In contrast, the value of loans to investors buying new dwelling remained unchanged in the range of around $0.35 billion to $0.37 billion in the 12 months to April 2021.
Figure 3: Monthly value of loans to households (ex refinancing) by dwelling type and purchaser, Victoria ($billion)
Source: Lending Indicators, ABS