Investors roar back into property market

The Australian mortgage market remained red hot in May, hitting new all-time highs according to new data released today by the Australian Bureau of Statistics (ABS).

The total value of new mortgage commitments rose by a seasonally adjusted 4.9% in May 2021 to be up 95.4% year-on-year:

Mortgage demand

Another record high.

As shown above, the record increase in new mortgage commitments has been driven by owner-occupiers, whereas investor demand remains just below its 2015 peak.

That said, investor mortgages are now growing at turbo-charged rates, up 116% year-on-year versus 88% growth for owner-occupiers:

Mortgage growth rates

Investors roar back.

The return of investors continues to crowd-out first home buyers (FHBs). Their share of new mortgage commitments retraced further to 21.0%. That said, FHB demand remains strong overall, up 81.8% year-on-year in May:

First home buyers

First home buyer mortgage share falling.

The strong growth in new mortgage commitments is the key reason why Australian property prices are growing so rapidly.

Next week I will compare mortgage growth to price growth across the major capital city markets.

Unconventional Economist
Latest posts by Unconventional Economist (see all)

Comments are hidden for Membership Subscribers only.