Affordability remains a concern, peak body warns
The value of new loan commitments has fallen 4.4% and investor loans dropped by 6.3%, driven by the impacts of rising inflation and interest rates, according to the latest data from the Australian Bureau of Statistics.
However, while lending commitments fell, they are still above pre-pandemic levels, according to Hayden Groves, president of the Real Estate Institute of Australia. Commitments for owner-occupier loans are still 50% above pre-pandemic levels, and investor loans are 101% higher.
“The total value remains at historically strong levels at $31 billion,” Groves said.
However, Groves said that housing affordability remains a concern, with the number of loan commitments to first-home buyers dropping by 8% despite government incentives.
“REIA’s Housing Affordability Report showed that housing affordability declined over the March quarter of 2022, with the proportion of income required to meet loan repayments increasing to 37.3% – an increase of 0.2 percentage points – and it is expected this trend will stabilise as housing price growth becomes more realistic,” he said.
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The drop in lending commitments coincides with new data from CoreLogic that shows declines in house price growth in five of Australia’s capital cities, as well as many regional cities.
“Australia’s housing market recorded another decline in prices, led by Sydney and Melbourne, at -2.2% and -1.5%, respectively,” Groves said. “Given RBA’s assertive attempt to curb inflation by the successive raising of interest rates, prices can be expected to stabilise after mammoth and unprecedented growth across the capital cities.”
