New home loans hit record high

And some pundits say that there’s even higher peaks to be hit

New home loans hit record high

The demand for loans for new homes is continuing its skyward trajectory as buyers continue to flock to new build.

ABS October figures show the fourth straight month of increases – driving the monthly mortgage commitment record to its highest level since records began - $2.85 billion.

Federal and state incentives are helping to propel borrowing, and some think there’s even more to come. “The extension of HomeBuilder will see these strong results carry on well into 2021,” Housing Industry Association economist Angela Lillicrap said.

Nearly $1 billion of COVID-19 HomeBuilder grants have already been awarded – the number of people taking advantage of the government subsidy has already exceeded treasury estimates of 27,000 according to figures released by The Australian – and that number could be exceeded by 50% by the end of the year. Almost 3,500 grants were applied for each week by the end of November.

Figures released yesterday by The Australian Industry Group – the Performance of Construction Index, showed further improvement – hitting a score above 50 (expansion) for the first time since 2018. The index growth comes on the back of housebuilding activity and a large amount of new orders. Although commercial construction numbers slipped, new orders increased, providing some light at the end of the tunnel. Apartment building, however, continues to fall.

“Apartment building remains in the contractionary state it has been in for more than two years and, with question marks over population growth and falling new orders, this sector is the major dampener on the otherwise encouraging outlook for the broader construction sector,” Australian Industry Group head of policy Peter Burn said.