Australian lending has grown yet again, with $26 billion in new borrowing commitments approved in December alone, according to the latest ABS figures.
It represents 31.2% growth on last year’s figure, with owner-occupier loans up nearly 40% year-on-year.
Given the strength of buyer appetite, coupled by a lack of sellers, the Commonwealth Bank is forecasting 8% price growth across capital cities this year.

Seduced by historically low interest rates and government incentives, buyers are racing into rebounding property markets at a breakneck clip.

The latest ABS data shows Australian borrowing rose for the seventh consecutive month in December to hit more than $26 billion in new commitments, up 31.2% year-on-year and 8% up on a record November.

The growth continues to be led by owner-occupiers, growing at a rate of nearly 39% year on year as they were approved for another $20 billion. Investors meanwhile took out a little more than $6 billion, growing their share by closer to 1% on last December.

“Aspiring first home buyers may be cautiously optimistic about the state of their finances, with lower interest rates and relaxed lending guidelines making the loan they aspire to obtain more affordable. On the other side first home buyers may be fearful of missing out as house prices rise,” Canstar financial services executive Steve Mickenbecker said.

Booming demand for property, coupled with a lack of forthcoming sellers, is expected to drive values higher still in the short-term.

“We expect house prices to continue to rise at a faster pace than apartments through 2021,” Commonwealth Bank senior economist Belinda Allen said.

“Our forecast is for a 9% lift in house prices in 2021 and a 5% rise for apartments. This would leave overall dwelling prices for the eight capital cities up by 8% over the year.”

Yet while that may cause the mind to google, considering values are already sitting at record highs, lower interest rates for longer is helping to offset mortgage stress.

Allen added she didn’t believe the “dynamic of rising dwelling prices and new lending will pose financial stability risks for Australia’s household sector”, although maintained it was something regulators would keep a firm eye on.

New homebuilders a shot in the arm

Perhaps the keenest demographic however are those Australians looking to build their own digs.

“Lending for new home building soared over December, driven by an end of year rush by borrowers desperate to take advantage of the federal government’s HomeBuilder grant,” Andrew Wilson, chief economist at property platform Archistar, said.

The stats show that in December alone, nearly 8,200 home building loans were approved across the nation — beating November by 15.3%.

It ended the year on an exuberant high. Despite a pandemic that locked down different parts of the economic at various points, almost twice the number of homebuilding loans were approved on the year prior.

While record low interest rates have helped, Wilson attributes the strength of the lending market largely to the federal government scheme, which despite a slow start appears to have hit its mark.

Initially offering $25,000 for eligible new builds and renovations, the initiative will kick stimulus well into the new year, according to Wilson.

“Although the first offering of the grant has now ended, the government has announced an extension to the clearly popular scheme, but with a reduced allowance of $15,000 – and scheduled to conclude at the end of March,” he said.

“Home builders have clearly benefited from the surge in demand for new houses over the past 6 months and although the Home Builder scheme will conclude [soon]… its consequences will continue to provide significant and much-needed energy to a recovering economy.”

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