New housing loans cooled in December, with a notable 5.6% dip in lending to owner-occupiers.

That said, the average owner occupier loan size was up strongly from $608,000 in November to a new record of $624,000.

Investor lending fell by a more modest 1.3% for the month.

Over the 2023 calendar year, the value of new housing lending, excluding refinancing, still surged 11.7%.

The December figure was well down on the November result when new loan commitments for housing rose 0.7%, seasonally adjusted.

The end-of-year dip was in line with forecasts from Australia’s largest home lender, Commonwealth Bank of Australia, that tipped a 4.5% decline in new housing lending for the month, well below analysts' consensus.

Lending up in Tasmania

State by state, Tasmania was the only state to record an increase in new home lending for December with a jump of 3.3%.

This was a turnaround on the state’s performance for 2023 overall. Tasmania was the only state where lending for new owner-occupiers contracted, dropping 9.1% last year.

Of the other states, South Australia saw the biggest monthly fall with a 6.2% drop.

Queensland notched a 5.8% decrease while New South Wales recorded the national average 4.1% drop.

Investor lending buoyant

Although investor lending fell slightly in December, it finished the year 20.4% higher showing much stronger growth than owner-occupier lending.

By state, investor lending was strongest in Western Australia, 5.6% higher in December, and Tasmania, up 4.6%.

Investor lending fell in Queensland and South Australia, both recording a 2.8% drop, while there were only marginal falls in both New South Wales and Victoria.

Over 2023, Western Australia led the charge in investor lending growth, up a sizeable 42.8%, followed by Queensland with 24.7% growth.

New South Wales was next with a 22% annual increase.

Shortage of home listings drive rising prices

Although housing lending finished the year on a softer note, CommBank noted the pace of growth increased in the second half of the year as housing listings lifted from subdued levels.

The bank said lack of listings was a key reason why housing prices rose more than new lending figures suggested.

Despite increasing interest rates, strong underlying demand for housing was not supported by supply, leading to rising home prices, the bank said.

First home buyers hanging in

The flow of housing lending to first home buyers in 2023 came in 3.3% lower than in 2022.

This was much less pronounced than the larger drop-off in other owner-occupier lending. It fell 19.4% with investor lending 12.1% lower.

In other figures announced today, lending for personal fixed term loans fell 2.4% in December while lending to businesses rose.

Notoriously volatile business construction lending jumped 3.3%, rising 0.9% in trend terms, while lending for business property purchases increased 1%, trending steady.

Image by Alexander Drummer on Unsplash

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