Housing finance ticks higher as balance tilts further from investors to first home buyers

Australia’s housing finance data has recorded a better than expected result in May after five months of falls.

The May data represents a period of “stabilisation” amid a turbulent time for the property market, experts say, particularly for the investor segment.

The total number of new home loans gained 1.1 per cent on a seasonally adjusted basis, according to the Bureau of Statistics data released on Tuesday. The market expectations was for a 2 per cent fall.

Meanwhile, the value of all property loans in the month grew 0.5 per cent to $31.9 billion.

A tightening credit environment continues to see investor lending fall, down 0.1 per cent in May compared with a 0.7 per cent rise among owner occupiers.

After several months of sharp falls, however, lending to property investors has now fallen to its lowest level since September 2013 on a trend basis, Indeed chief Asia Pacific economist Callam Pickering said.

Investors accounted for 42 per cent of new mortgage lending, which is the lowest level since 2011.

“Investor lending was at a high and unsustainable level, and was always likely to ease,” Mr Pickering said.

“And while 42 per cent is still a relatively high number for the segment – roughly in line with decade averages – it’s the sheer change that is the concern for people in the property market.”

First home buyers wade in

First home buyers continue to partially offset the impact of weakening investor lending.

“Since December 2016, total new mortgage lending has declined by 4.6 per cent,” Mr Pickering noted. “Investors have contributed a decline of 8.7 per cent, while first home buyers have gained 3.4 per cent in that period.

“House prices would have fallen by more if FHBs had not stepped in.”

The number of first home buyer commitments as a percentage of total loans was unchanged in May at 17.6 per cent, but NSW recorded the highest number of first home buyer loans since December 2011, according to CoreLogic residential research analyst Cameron Kusher, who said lower prices ahead could provide an opportunity.

The average first home buyer loan size is 8.4 per cent higher than it was a year ago, according to Mr Kusher, which is the biggest annual rise since July 2015.