June Housing Finance Rebound Amidst COVID-19 Concerns

  • Article by: Sally Wood

In May 2020, the value of home loans fell to an historic low due to concerns regarding COVID-19 restrictions. However, figures released by the Australian Bureau of Statistics (ABS) in August show that in June, the value of new home loan commitments has rebounded.

According to the Real Estate Institute of Australia (REIA), there has been a 5.5% increase in the value of new home loan commitments for owner-occupier housing in June, and an 8.7% increase for the entire year so far. Queensland and New South Wales are primarily responsible for this increase while in Victoria there has been a decline – which is a reflection of the level of restrictions currently imposed upon the states. 

However, despite this positive turn, housing loan commitments in June are still 10% lower than figures from March, prior to restrictions and the significant falls in April and May.

Additionally, in June there was an 8.1% increase in the value of new loan commitments for investor housing. This is following 15.6% decrease in the month prior. Overall, however, there has been a 6.1% for the year as of yet. Largely, the increase can be attributed to New South Wales.

June also saw an increase of owner occupier first home buyer loan commitments, rising by 6.2% in seasonally adjusted terms. Increases were seen across all states and territories except the ACT and Victoria.

There was also a 9.7% increase in lending to owner-occupiers purchasing established dwellings in the month of June, though this is still below figures that were recorded in late 2019.

These rises can be attributed to decreased COVID-19 restrictions and regulations, as well as the introduction of several government initiatives, such as the HomeBuilder program. For example, the HomeBuilder program is likely responsible for the 33.8% increase in the number of home loans to owner-occupiers purchasing residential land in June.

As such, while the COVID-19 pandemic has undoubtedly had severe ramifications on the housing market, there is hope for the coming months that we are experiencing a positive upswing.

looking att plans to build new home in construction site

What is HomeBuilder?

The HomeBuilder Scheme, which was announced by the Federal Government in June, provides eligible Australians with a $25,000 grant to help them build a new home or significantly renovate a pre-existing one.

The scheme is open to all owner-occupants, including first-time home buyers. It is predicted that approximately 27,000 grants will be issues, making the scheme worth an estimated $680 million.

So far, HomeBuilder has proven to be hugely successful, resulting in a 77.6% spike in new home sales in the month of June after recording an 11.6% drop in home loans the previous month.

Published: 21/08/2020
Author: Sally Wood