Housing Revival Driven by More Home Loans
Recently released official figures have shown that the total exposure to residential property loans of Australian lenders to households was $1.13 trillion. This marked an increase of 7.3% in the twelve months to June, 2013.
In the June quarter, an increase of 28% (to $79 billion) was observed in the number of new loans approved by banks and other lenders. This improvement reflects the recovery of the housing market and is evidence that the market is gaining momentum.
The total exposure of the banking sector to property is expanding more slowly than rates of new lending. This is attributable to the fact that borrowers are capitalising on the low interest rates available to pay off their debts and are simultaneously removing older loans from banks.
Investors are the most rapidly growing group for property lending, while strong growth has been observed in the number of loans approved for owner-occupiers.
In Sydney, auction clearance rates are almost achieving record highs and this has stimulated debate about a possible bubble in Australian property.
According to JPMorgan economist, Tom Kennedy, further recovery of the housing market will probably see lending flow into property investment.