Lending and Property Update – March 2022

Housing finance in January hit a new high in January up 0.6% at $33.7 billion, excluding refinancing.

This lending increase was mainly led by investors, up 6.1% in the month, despite government incentives from schemes such as the First Home Deposit Scheme releasing more places in the market.

The Omicron wave has also failed to deter the business credit sector with it seeing similar growth during the month. Likely contributors to this were government incentives such as the instant asset write-off and the loss carry-back which are still available until 2023.

Growth in the housing market is starting to lose momentum with growth down to 0.6% in February – the slowest monthly growth rate since March 2020. The overall picture is bullish with annual growth at 20.5% to February, however the peak is likely behind us. Supply in the market remains relatively low, however recent weeks seem to show an increase which will likely lead to a further relaxation of growth.

Dwelling prices in Sydney went backwards for the first time since September 2020. The highest reductions were in the luxury end of the market which does typically see more fluctuation that other segments. Melbourne has traditionally followed Sydney, however prices there remained flat. These bigger cities have been outperformed by their smaller, more affordable cousins where the median dwelling price is continuing to hang at record highs.

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