Home loans surge in Australia as owner-occupiers borrow $20bn in December | Housing

Home loans continue to grow at a record pace, driven by enthusiastic demand from first-time buyers even as housing prices hit new highs in the first weeks of 2021.

The risk of an overheating housing market may raise concerns for the Reserve Bank of Australia down the track.

But economists do not expect it will be making any short-term changes to monetary policy when its board meets for the first time this year on Tuesday.

The Australian Bureau of Statistics said the value of new owner-occupier home loan commitments surged by 8.7% to $19.9bn in December, 38.9% higher than a year earlier.

The number of owner-occupier first-home buyer loans rose by 9.3%, a 56.6% rise since December 2019.

“Federal and state government measures, such as homebuilder, and historically low interest rates are supporting ongoing growth in housing loan commitments,” the ABS head of finance and wealth, Amanda Seneviratne, said.

Demand for mortgages from first-home buyers is now at its highest level since June 2009, when similar rapid growth was triggered by the temporary tripling of a first-home owner grant to help combat the global financial crisis.

Separate figures show house prices across the nation rose by a further 0.9% in January and now stand 0.7% above the previous September 2017 peak.

Regional property values grew at twice the pace of capital city housing markets, with the divergence more notable in Sydney and Melbourne, which are suffering from the lack of overseas migration.

“Better housing affordability, an opportunity for a lifestyle upgrade and lower density housing options are other factors that might be contributing to this trend, along with the newfound popularity of remote working arrangements,” the CoreLogic research director, Tim Lawless, said.

AMP Capital’s chief economist, Shane Oliver, believes the reserve bank may start feeling a bit uneasy about the pace of the rebound in lending commitments and house prices.

“At the very least, it would make sense for home borrower incentives to be wound back in the months ahead and not extended,” Oliver said.

“It will likely remain premature for the RBA to start raising interest rates … given continuing uncertainty and spare capacity regarding the wider economy.”

Monday’s data releases are another sign of Australia’s rapid recovery from last year’s recession, according to the prime minister.

“The economy is already on the way back and betters the experience of most advanced nations in the world today,” Scott Morrison told the National Press Club.

“Australians are now voting with their feet to join the economic recovery,” he added, referring to the unexpected drop in the jobless rate to 6.6%.

But the shadow treasurer, Jim Chalmers, said the PM missed the opportunity to set out what he would do for the two million Australians who cannot find a job or find sufficient hours of work.

New job advertising figures suggest further employment gains in the first half of 2021 are likely.

The ANZ jobs ads series rose by 2.3% in January, the eighth consecutive monthly increase, and are now at their highest level since April 2019.

At the same time, manufacturers have used the usually quiet year-end holiday period to make up for the business lost over 2020 during the recession.

The Australian Industry Group performance of manufacturing index increased by 3.2 points over the past two months to 55.3 points, indicating the sector is expanding.