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Home approvals and loan commitments fall, but investor activity soldiers on
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  • According to figures issued today by the Australian Bureau of Statistics (ABS), new home loan agreements fell 1.6 percent in June 2021
  • New home loan commitments are still maintained at a historically high level of $32.1 billion
  • The value of new loan commitments for investor housing rose 0.7 per in June, after increasing 13.3 per cent the month previous
  • The number of dwellings approved also fell 6.7 per cent in June (seasonally adjusted), for a third consecutive month

According to figures issued today by the Australian Bureau of Statistics (ABS), new home loan agreements fell 1.6 percent in June 2021 (seasonally adjusted), but grew slightly for investors.

New home loan commitments are still maintained at a historically high level of $32.1 billion, with the value of new loan commitments for investor housing rising 0.7 per cent in June.

This slight increase comes after a large 13.3 per cent increase in the previous month, with investors still outnumbering first home buyers.

The number of new loan commitments to owner-occupier first home buyers fell for a second consecutive month, down 7.8 per cent in June, but still at elevated levels. 

ABS head of finance and wealth Katherine Keenan said the value of new loan commitments for owner-occupier housing fell 2.5 per cent in June 2021.

"While this was the largest fall since May 2020, owner-occupier commitments remained 76 per cent higher compared to a year ago and 64 per cent higher than pre-COVID levels in February 2020," she said.

"The largest contribution to the fall in owner-occupier loan commitments was a fall of 17 per cent in the value of loan commitments for the construction of new dwellings. In addition to this, there was no growth in lending for the purchase of existing dwellings."

The number of dwellings approved also fell 6.7 per cent in June (seasonally adjusted), for a third consecutive month, following a 7.6 per cent fall in May and a 5.0 per cent fall in April, according to the ABS.

ABS director of construction statistics Daniel Rossi said the fall in the total number of dwellings approved in June was driven by a 11.8 per cent fall in private sector houses.

"Since the unwinding of stimulus measures, approvals for private houses have fallen 20.9 per cent from the record high in April. Despite the fall, private house approvals remain at elevated levels and are 44.3 per cent higher than June 2020 and 37.6 per cent higher than June 2019," he said.

Houding Institute of Australia chief economist Tim Reardon said the data showed that there were 94.4 per cent more loans issued for new home construction that in the previous financial year.

"HomeBuilder and other grant programs have also ensured that there were more loans issued to first home buyers in 2020/21 than in any previous financial year.

"Building approvals and issuing of loans for construction did fall in the month of June 2021, confirming that the bulk of new projects initiated under HomeBuilder have passed the last regulatory hurdles."

Mr Reardon said regional areas have seen a greater increase in building approvals than capital cities as the population shifts toward lower density areas.

"The exodus of residents from Melbourne is a trend that has emerged following the COVID recession with more than 32,000 residents departing in the year to March," he said.

"Sydney also lost 31,600 residents to other parts of the country over the same time however, this is consistent with the trends of the past 20 years.

"Given that the population is moving interstate and building new homes it is unlikely that they intend to return to Sydney or Melbourne."

Mr Reardon said this shift in population is the main driver of the tight rental market that exists across the country, other than in Sydney and Melbourne.

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