Finance data for housing in December 2016 was released last week by the Australian Bureau of Statistics. Housing finance continued to trend higher in December 2016 and the increase was driven by owner occupiers rather than investors.
In December 2016, 7.1% of housing finance commitments were to owner occupier first home buyers, 17.9% for refinances by owner occupiers, 35.5% to owner occupier non- first home buyers and 39.5% to investors.
Whilst constraints were implemented to investors in 2015 to restrict access to mortgage finance, investors are still playing a strong role in the market place. Even though demand for new dwellings has eased the demand for established investment properties continues to grow. Contributing to this gap would be a couple of main factors – the amount of established homes available compared to new homes and the affordability of established homes compared to new homes. Affordable and established housing stock therefore looks more attractive to investors. The figures for December 2016 show this gap with $3.8 billion worth of commitments for new housing compared to $23.3 billion for established housing.
As interest rates are currently low and population growth remains strong, it is anticipated that demand for owner occupied housing finance will continue to rise. The December 2016 owner occupier housing finance commitments was $20.2 billion. This was split between: $1.1 billion for purchase of new dwellings, $1.9 billion for construction of new dwellings, $6.3 billion for refinancing of established dwellings and $10.9 billion for purchase of established dwellings.
This growth will in turn reflect in a growth of home values – as can currently be seen throughout Melbourne suburbs. We will keep updating Melbourne property trends with the association with the largest property data provider in Australia. Find out how you can obtain a FREE Corelogic-RP data property profile report for your next property you want to buy.