AUSTRALIAN LENDING MARKET SEES STEADY GROWTH IN 2024

/in /by

The Australian lending landscape has shown remarkable resilience and growth in 2024. The latest data from the Australian Bureau of Statistics (ABS) revealed increases across housing, personal and business loans.

This upward trend paints a picture of a robust economy and growing consumer confidence despite the challenges faced in recent years.

 

Housing market leads the charge

The housing sector continues to be a significant driver of lending activity.

In June:

  • New housing loans increased by 1.3% and reached a total value of $29.2 billion.

This growth is particularly noteworthy in the investor segment that saw a 2.7% rise to $11.0 billion.

  • Owner occupier loans also grew, albeit at a slower pace of 0.5%, and reached $18.2 billion.

The disparity between investor and owner occupier growth rates highlights a shift in market dynamics. Investors appear to be capitalising on favourable conditions and are potentially driven by expectations of capital growth and rental yield opportunities. This trend could indicate a competitive rental market and may impact housing affordability for tenants.

 

Regional variations in loan sizes

New South Wales continues to lead the nation in average loan sizes for both owner-occupiers and investors:

  • The average loan size in NSW reached $780,000 for owner occupiers and $818,000 for investors.

These figures underscore the ongoing affordability challenges in Australia’s most populous state, particularly Sydney’s property market.

  • Other states and territories also saw increases in loan sizes and reflect the broader trend of rising property values across the country.

This situation presents both opportunities and challenges for potential homebuyers and investors depending on their financial position and long-term goals.

 

FIRST HOME BUYERS RE-ENTERING THE MARKET

Encouragingly, first home buyers are showing renewed interest in the property market. The number of loans issued to first home buyers increased by 5.8% in the June quarter compared to the previous quarter. This resurgence could be attributed to various factors, including government incentives, stabilising interest rates and a desire to enter the market before further price increases.

 

BUSINESS AND PERSONAL LENDING ON THE RISE

The lending growth isn’t limited to the housing sector.

Business lending has also seen significant increases:

  • loans for business construction rose by 4.5% and
  • business property purchases were up by 3.4%.

This growth in business lending suggests increasing confidence in the commercial sector and will potentially lead to job creation and economic expansion.

Personal fixed term loans:

  • have seen a modest increase of 1.1%. This indicates that consumers are feeling more comfortable taking on debt for personal expenses or investments.

Building material costs stabilising

In a positive development for the construction industry and homebuyers alike, the cost of building materials has shown signs of stabilisation. After experiencing record high increases during the pandemic, price growth has returned to below pre-pandemic levels. This moderation in costs could help alleviate some of the pressures on new home construction and renovations.

 

WHAT THIS MEANS FOR YOU!

For potential homebuyers and investors, the current lending environment presents a mix of opportunities and considerations:

  1. With investor activity on the rise, competition for properties may increase and will potentially drive up prices in desirable areas.
  2. The stabilisation of interest rates provides a more predictable environment for borrowers to plan their finances.
  3. First home buyers may find more support and opportunities to enter the market, however they should be aware of the competitive landscape.
  4. The moderation in building material costs could make new construction or renovation projects more attractive.

 

TAKING ACTION IN THE CURRENT MARKET

Given the dynamic nature of the lending and property markets, it’s crucial for consumers to stay informed and proactive.

Here are some steps to consider:

  1. Review your financial position and borrowing capacity in the light of current market conditions.
  2. Allow our finance team to research different loan products and lenders to find a suitable finance fit for your needs.

We can provide insights into various loan options and help navigate the application process.

  1. For those considering property investment, analyse market trends and seek professional advice to make informed decisions.
  2. First home buyers should explore government incentives and support programs available in their state or territory.

The Australian lending market’s growth in 2024 reflects a resilient economy and presents various opportunities for borrowers.

Whether you’re a first time homebuyer, an investor or a business owner, now might be an opportune time to review your financial goals and explore your borrowing options.

Remember, every finance decision should be made with careful consideration of your personal circumstances and long term objectives.

Reach out for a personalised finance exploration tailored to your situation.