Total home loans rose to an all-time high in May, boosted by strong demand from investors, the latest data has showed.
The Australian Bureau of Statistics (ABS) said the total value of home loans taken out for the month climbed by 2.7% to a record $22.13bn. Loans for investment purposes jumped sharply by 8.9% to $6.92bn, while owner-occupier loans edged slightly by 0.2% to $15.21bn.
Martin Arnold, equities economist with CommSec, wrote in his report that the property market is on the comeback trail, but warns that it's early days yet. "Strong population growth is supporting the owner-occupied segment of the market, while rising rental yields are beginning to attract investors with vacancy rates hovering at historically low levels. Housing market growth will be gradual as market expectations for interest rate hikes ebb and flow," he noted.
The Mortgage & Finance Association of Australia (MFAA) agreed that while a single month's result is not conclusive, these statistics indicate that investors are now reacting to the shortage of rental properties that has seen rents rise substantially in recent months.
However, Phil Naylor, chief executive of MFAA, sounded the alarm on the notable drop in the proportion of first homebuyers getting into the property market.
"The figures show that housing continues to be a struggle for first homebuyers. First homebuyers' commitments eased to 16.6% of the total number of owner-occupier home loans in May, down from 17.2% the month earlier," he said.
The ABS report also showed that borrowers are now taking larger home loans. The average loan size for owner-occupied housing commitments rose from $227,500 in April 2007 to $234,300 in May 2007. Fewer homebuyers took out fixed rate loans amidst the current stable interest rate environment. Fixed rate loans dropped from 20% to 17.4% in the same period.