Solid growth in WA housing finance

New housing finance data is painting a positive picture for Western Australia’s residential property sector, with both the value and the number of loans increasing in the last three months of 2019.

The value of home loans in Western Australia rose by 3.8 per cent in December, bringing the average mortgage size in the state to around $410,000, below the national average of $497,000.

According to the latest data from the Australian Bureau of Statistics, the value of home loans across Australia lifted by 4.4 per cent in December, up 14 per cent on a year ago. 

NSW recorded the highest average mortgage size of $621,500, ahead of Victoria ($517,900), ACT ($490,800) and Queensland ($419,800).

Tasmania recorded the smallest average mortgage size of $333,900, followed by South Australia ($358,200) and Northern Territory ($370,100).

Mortgage lending across Australia rose by 3.5 per cent in December, up 7.9 per cent on a year ago, driven by lending to first home buyers, which increased by 6.2 per cent in December.

Housing Industry Association economist Angela Lillicrap said it was the highest number of first home buyer loans since December 2009.

The number of first home buyers increased in every state except Tasmania.

Over the December quarter, lending to owner-occupiers in WA increased 4.7 per cent, while lending across Australia rose by 4.9 per cent.

“House price growth and lower interest rates are supporting market confidence leading to an increase in lending to owner-occupiers for the purchase of a new home," Ms Lillicrap said.

“This positive lending data is consistent with other leading indicators, including new home sales and building approvals, showing that the housing market reached a turning point mid-way through 2019.

“This confirms our expectations that the market reached a new, relatively shallow trough, in 2019.”

She said the high level of first home buyer activity reflected cyclical changes in the market.

Real Estate Institute of Australia president Adrian Kelly said the proportion of first home buyers, as part of the total owner-occupied housing finance loans (excluding refinancing) was 30.2 per cent.

“With the introduction of the First Home Loan Deposit Scheme in January 2020 we can expect a pickup in the January figures as well,” Mr Kelly said.

“The finance commitments for December reflect a continuing interest and boost in confidence in all buyer segments of the real estate market at the close of 2019.”

The housing finance data follows a lift in building approvals in WA, which rose by 3.6 per cent in December, according to the ABS.

While the approvals level remained 10 per cent under December 2018 levels, the Master Builders Association said the data supported a forecast of a sustained recovery.

New home sales are also on the rise in WA, with the state recording the fastest growth of any Australian state in the three months to the end of November.

Housing Industry Association data indicated new home sales rose by 14.4 per cent over the period, far eclipsing the national growth rate of 2.8 per cent.