House construction
Rents have remained static in the last two months after increasing by 39% between August 2020 and June 2024. Pixabay

The Australian Bureau of Statistics has reported a significant swell in the total value of new housing loans by 3.9% to AU$30.6 billion in the last one year.

Based on the latest figures from July, while the new loans for investors rose by 5.4% to AU$11.7 billion, which was 35.4% more than in July 2023, loans taken by people buying homes to live in rose by 2.9% to AU$18.9 billion -- 21.4% more than last year.

Lending by first-time home buyers increased by 0.8% in July, and was 19.7% higher compared to July 2023. July also recorded a national average of new owner-occupier loans and new investor loans at AU$641,000.

"Investors have continued to see the largest growth in new loans over the past year, increasing more than a third in value since July 2023 from $8.6 billion to $11.7 billion," ABS head of finance statistics Mish Tan said. "The increased investor activity we're seeing in the lending statistics is mostly because more loans are being approved, and is only partly driven by higher dwelling prices."

Oxford Economics Australia senior economist Maree Kilroy said a tight rental market and higher gross unit rental yields were boosting investor demand, reported AAP.

However, renters can be optimistic, as the surge in rent prices might be starting to fall. According to property data firm CoreLogic, in the past two months rents have remained static after increasing by 39% between August 2020 and June 2024.

Home price growth too has been slowing down, with more houses listed in some major cities and others reaching their affordability limits, though the strong performance in mid-sized capitals is still driving up average loan sizes.

Despite rising prices impacting the first-home-buyer demand, Kilroy expected a mild raise of 5% in capital city home prices over the next 12 months, supported by tax cuts and real wage gains.

"However, with interest rates likely on hold until June quarter 2025, affordability will remain a significant constraint," she said.

Due to the slow progress of inflation rate, Bendigo Bank chief economist David Robertson predicted that the Reserve Bank of Australia might not cut interest rates until 2025.