Master Builders Victoria (MBV) analysis of Australian Bureau of Statistics (ABS) data from October 2021 shows more strong growth in the value of loans for housing but declines in owner-occupier lending.    

There has been strong growth in the number of loans to Victorian housing investors to construct new homes, purchase residential land, and do home renovations.  However, the number of loans for investors to purchase newly built homes has fallen back down to 375, the same figure as earlier this year.   

MBV CEO Rebecca Casson said October represented another month of decline for most segments of owner-occupier lending in Victoria.

“The drop off in loans for the purchase of residential land and the construction of new homes has been particularly large, decreasing by 23.9 per cent and 24.1 per cent respectively since June 2021,” Ms Casson said. 

“The number of loans for homeowners to construct new homes is still high by historical standards at 2228 in the three months to October 2021. This is an increase of just over 24 per cent than the 5-year average of 1794 for these types of loans.

“The successful HomeBuilder scheme generated this spike in supported work at the start of 2021.”  

Despite reductions in some avenues of lending, Ms Casson said the average value of loans taken on by owner-occupiers for the construction of new homes ($491,224), the purchase of newly erected homes ($551,524) and residential land ($320,477) continues to expand strongly as demonstrated in the average values for the three months to October 2021.  

“As well as the number of loans starting to decrease after the sugar rush from HomeBuilder slowly fades, recently released changes will also play a role in the decline in loans,” Ms Casson said.

“The decision by the Australian Prudential Regulation Authority (APRA) to increase the minimum interest rate buffer was implemented from 6 October, so the effects of this change on loans may not be fully realised until new data is released in the next few months.  

“For some Victorian's wanting to become first homeowners, this means that they will only be eligible to take out a smaller loan - and a few will be ineligible to take out a loan at all.”

Ms Casson said the surge in house prices and the increase in price for materials and supplies throughout the COVID-19 pandemic had been unfavourable for housing affordability.  

MBV has a long-term policy objective of achieving housing affordability for all Victorians.

MBV believes this can occur when new housing supply can be delivered as quickly and cost-effectively as possible. However, there are several limitations in our ability to capture data to fully understand the complex issue of housing affordability.

For example, data captured on the purchase price of residential land is limited, making it hard to ascertain its overall effects on the cost of the supply of new housing. And the purchase price of land is usually predetermined by local councils and the State Government. Our only way of understanding the price of land is through changes in average loan sizes released from the ABS.  

 In Master Builders Australia’s (MBA) recent submission to the Housing Affordability and Supply Inquiry by the Federal Government, MBA advocated for more adequate data to be made publicly available. 

 In addition, MBV has asked the Victorian Government to increase land supply for new homes and for relief from taxes that will burden Victorians and directly affect housing affordability prior to the 2022 State Budget.