There was a sudden boost in the appetite for residential land in July, with loans for the purchase of vacant land surging, according to the Australian Bureau of Statistics (ABS).
Financing commitments for the purchase of land increased for the second month in a row in July, up by 30% from June and 70% from the same time last year.
The announcement of the federal government's HomeBuilder scheme boosted the demand for residential land, said Tim Reardon, chief economist at the Housing Industry Association.
"The surge in land sales should see a recovery in the number of slabs being poured as early as the December quarter, as customers proceed through the process to design and construct a new home. This will protect employment in the residential building industry and across the economy into 2021," he said.
All states recorded significant increases in land loans over the month, with Tasmania, Queensland, Western Australia, and South Australia reporting two-fold gains.
Overall, lending activity among home buyers and investors continued to recover from the historic fall in May. In fact, the value of housing loans rose by 8.9% in July on a seasonally-adjusted basis. This is the highest month-on-month increase ever recorded by the ABS.
Both owner-occupier and investor segments reported strong increases in home financing over the month, with the former hitting a 10.7% gain while the latter posting a 3.5% growth.
This recovery in lending was not necessarily "unexpected", especially given the easing restrictions across states during that time, said Adrian Kelly, president of the Real Estate Institute of Australia.
"But the roller coaster will continue with further restrictions in Australia's second largest market of Melbourne in August and September," he said.
Compared to last year, the value of loans for owner-occupiers increased by 18.5% but fell by 5.7% for investors.
The markets with the highest activity from investors include New South Wales, Western Australia, and South Australia.
Of the major states, Western Australia reported the most substantial gain in overall housing finance at 17%. Victoria followed with a 9% increase — this, however, is prior to the stage four lockdown imposed the following month.
"While Victoria will weigh heavily on the national outlook for the remainder of 2020, further improvement in housing finance indicators is expected for the rest of Australia over the coming months," said Timothy Hibbert, principal economist at BIS Oxford Economics.
