Canberra property: First-home loan approvals down despite stronger market

Canberra first-home buyer numbers have fallen despite recent positive signs of a consolidating improvement in the local housing market.

Latest Australian Bureau of Statistics (ABS) data reports that 138 first-home loans were approved over August, which was a reduction of 12.1 per cent on the 157 approved over July.  The August total was the lowest recorded since January this year and also below the 143 loans approved over August 2014.

Although August first-home buyer home loans fell over the month in Canberra, 1300 loans have been approved over the first eight months of this year, which is an increase of 161 or 20.7 per cent over the same period last year.

The average Canberra first-home buyer loan increased sharply over the month from $319,500 to $328,700. The August average loan was 2.7 per cent higher than the $320,000 average loan recorded over August last year.

Lending to first-home buyers in Canberra accounted for 11.9 per cent of all residential lending excluding home loan refinances over August and remains below the 16.9 per cent long term average market share for this group.

Canberra also recorded a sharp fall in investor lending over August with the value of loans approved to this group down from $204.6 million to $158.8 million, a decrease of 22.4 per cent.  Despite this sharp fall, the value of investor lending in Canberra over the first eight months of this year remains 24.2 per cent higher than recorded over the same period in 2014.

Investor activity over August accounted for 41.8 per cent of all residential lending over the month, which is the lowest market share recorded since February.

All states again recorded sharp decreases in investor lending over the month following similar declines the previous month.  Action by banks to increase interest rates to investors at the direction of the regulatory authorities is clearly having an impact on investor activity nationally.

The ABS reported that the value of finance approved for owner occupier dwellings excluding refinancing was also down over August, falling by 2.8 per cent to $220.9 million.

Reflecting particularly the sharp fall in investor lending in Canberra over August, the value of finance approved for total dwellings excluding refinancing fell by 12.1 per cent over the month to $379.8 million, again the lowest monthly result since February.

Dr Andrew Wilson is Domain Group senior economist. Twitter@DocAndrewWilson, The Property Show expert, 2UE Saturdays 12.30-1pm