Andrew Wilson: Record lending strengthens Canberra housing market

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The Canberra housing market continues to strengthen, with latest lending for home purchases now at record levels.

The ABS reported a total value of $555.9 million approved for home purchases over March, which was an increase of 38.2 per cent compared to the previous month. Home loans to the value of $1.372 billion have now been approved over the March quarter, which is an increase of 20.1 per cent compared to the same period last year.

Changeover buyers have contributed strongly to the surge in home lending, with 721 home loans approved to this group over March, which was a new monthly record high for the Canberra market. The average home loan approved for changeover buyers over March was $417,460, 8.9 per cent higher than the average loan approved over March last year.

Lending to residential investors in Canberra also increased over March, up by 26.1 per cent to $210.6 million. Over the year ending March the value of loans approved for residential investment has increased by 11.0 per cent compared to the year before.

Although lending for investors and changeover buyers is surging in Canberra, first-home buyer activity remains subdued. Just 381 first-home buyer loans were approved over the March quarter which, although well up on the previous month, remained 42 fewer or 9.9 per cent lower than the 423 approved over the March quarter last year.

The average first home buyer loan approved over March in Canberra was $340,600 – an increase of 5.5 per cent compared to the average recorded over March 2016.

National residential investment activity surged over March despite policies directed through banks to curtail lending to this group. The value of investor loans increased by 27.1 per cent over the month with all states recording strong increases. Residential investor lending nationally is now 19.3 per cent higher than that recorded over the same month last year.

Dr Andrew Wilson is Domain Group Chief Economist.

Twitter@DocAndrewWilson, join on LinkedIn and Facebook at MyHousingMarket.