The value of new home lending has almost doubled since May last year.

The latest ABS stats show that new home lending increased by 4.9% in the month of May and Aussies borrowed a whopping $32.5 billion in new home finance.

That means over $1Billion a day of new money is going into our property markets each day.

And property investors are back with investor lending now at the highest level since June 2015 however, this investor surge comes at the cost of first home buyers, with the number of owner-occupier first home buyer loans dropping for the fourth month in a row.

Of course, finance approvals are what we call a leading indicator – suggesting that our property markets are going to remain very strong over the coming months.

In my Property Insiders chat today with Australia’s leading housing economist, Dr. Andrew Wilson, chief economist of My Housing Market we look at what this means for property, as well as what’s happening in our housing and rental markets.

Watch this week’s video as we discuss what happened in our auction markets over the weekend, as they give a good “in time indicator” of what’s happening on the ground.

Auction clearance rates remained strong this weekend despite significantly increased withdrawal numbers because of Sydney’s Covid lockdown.

Sydney Auction Market

Covid withdrawals dragged down Sydney’s auction clearance rates to a year low.

Sydney’s booming home auction market recorded the lowest clearance rate of the year so far with predictably high numbers of Covid lockdown-related withdrawals.

17.5% of properties listed for auction this weekend were withdrawn from sale.

Sydney recorded a clearance rate of 76.9% on Saturday which is well below the previous weekend’s 83% and just ahead of the 75.4% over the same weekend last year.

The northern beaches were Sydney’s top-performing region at the weekend with a clearance rate of 91.2%, followed by the Central Coast at 89.4%.

Melbourne Auction Market

Holiday Melbourne market eases, but sellers clearly still retain the upper hand.

Melbourne auction clearance rates eased at the weekend impacted by the distractions of mid-winter school holidays, but it was still a record day of July auction numbers.

853 homes were listed to go under the hammer on Saturday, which although well below last weekend’s pre-holiday 1320 auctions, was nonetheless a record number for a July Saturday.

Melbourne recorded a clearance rate of 76.9% which was lower than the previous weekend’s 79%.

Latest housing finance figures – investors take off

The value of new home lending has almost doubled since May last year.

New home lending increased by 4.9% from the month prior and a whopping 95.4% or $15.90 billion from May 2020.

While the value of owner-occupier lending only saw moderate month-on-month gains, investor lending has gone through the roof, up to $1.07 billion from April, according to new ABS data.

Investor lending has now hit the highest level since June 2015 with $9.13 billion of new loans in May, more than double the value in May last year when COVID was in its early stages.

However, the investor surge comes at the cost of first home buyers, with the number of owner-occupier first home buyer loans dropping for the fourth month in a row in seasonally adjusted terms.

While first home buyer numbers are down, the value of first home buyer lending is up, reflecting Australia’s rising property prices.

Watch this week’s Property Insiders video as Dr. Andrew Wilson explained the implications of the latest home loan data and how investors and first home buyer market segments are changing

Rental Markets Tighten Over June — Rents Rising

Capital city rental markets continued to tighten over June with vacancy rates remaining at generally low levels — and still falling.

Low vacancy rates are predictably translating into higher rents with current trends indicating the little prospect of easing over the foreseeable future.

House rents have increased sharply over the past year in Brisbane, Adelaide, and Perth although Sydney rents have steadied with Melbourne down by 4.4%.

Melbourne continues to record the highest house vacancy rate of all the capitals at 2.3% although a tightening trend has emerged over recent months.

Shortages of houses for rent and higher rents in Brisbane, Adelaide, and Perth reflect monthly vacancy rates at or below 1% in all those capitals.

Gross rental yields for houses continue to fall as prices surge, although offset by rental increases in the smaller capitals.

Overall total gross investment returns inclusive of capital growth and rental income remain elevated as a result of booming prices growth.

Property vs shares – which makes a better investment?

The following chart from Dr. Andrew Wilson shows it’s a no brainer

Sure the Australian sharemarket finished last financial year on a high, with the growth of 25.6%.

But look at how Australian shares have performed since their pre-GFC peak compared to house price growth.

Shares vs Property – watch today’s video and hear our thoughts.



Michael Yardney is CEO of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.

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