Property investors continued to boost their presence in the market as home loans issued to their segment saw strong growth in December, according to the Australian Bureau of Statistics (ABS).
The value of investor loans, excluding refinancing, hit $5.44bn over the month, representing gains of 2.8% monthly and 4.9% annually on seasonally-adjusted terms.
"The value of new loan commitments for investor housing, while tracking upward over the past six months, remained down on the March 2017 peak," said Bruce Hockman, chief economist at the ABS.
Overall housing loans, which include financing commitments from both owner-occupiers and investors, grew by 4.4% from the previous month and 14% from last year.
The growth in loans issued to first-home buyers was one of the most remarkable results for the month, hitting 6.2% monthly and 3.6% quarterly.
"This is the highest number of first home buyer loans since December 2009," said Angela Lillicrap, an economist at the Housing Industry Association.
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However, the structural changes to the regulation of banks might make it increasingly difficult for the first-home buyer segment to access financing.
"We remain concerned that changes to the lending regime for first-home buyers mean that access to finance will be an impediment to this segment of the market when owner-occupiers and investors return to the market,” Lillicrap said.
Still, the robust price growth in most of the markets and the low interest-rate environment will likely make it favourable for first-home buyers to break into the market.
"Price growth in Sydney and Melbourne continues to run strong, with Australia's other major cities starting to join the party. With property turnover on the up, the outlook for total housing loan demand looks strong for 2020," said Tim Hibbert, principal economist for BIS Oxford Economics.
A recent analysis by CoreLogic head of research Eliza Owen said the demand for investors weakened with the introduction of some regulations limiting investment lending growth and interest-only lending. However, after being repealed by the start of 2019, investors started to return to the market.
"If affordability constraints create more demand in rental markets, the investor cohort could expand in the year to come, off the back of rising rents. This would be amplified as low mortgage rates make property investment more attractive," she said.