The average size of new owner-occupier loans in Australia has reached a record high in almost every state, reflecting surging property prices despite sustained high interest rates. Figures from the Australian Bureau of Statistics (ABS) show that in the December quarter, the national average loan size climbed to $666,000, nearly $300,000 higher than a decade ago.
At the same time, total new owner-occupier lending soared to $54.8 billion, an increase of $2.2 billion from the previous quarter. While investor lending declined slightly for the first time in nearly a year, it still remained significantly higher than in 2023. The data comes as the Reserve Bank of Australia (RBA) prepares for its next board meeting, with economists speculating on potential interest rate cuts.
Record-breaking loan sizes across Australia
The latest ABS data reveals that Australians are borrowing more than ever to secure property. New South Wales leads with an average loan size of $811,000, the highest in the country, followed by Queensland ($635,000), Victoria ($632,000) and the Australian Capital Territory ($650,000). Other states also saw significant increases:
- Western Australia recorded the largest percentage rise, with a 20 per cent jump in the average loan size to $599,000.
- South Australians borrowed an average of $580,000, while Tasmania ($473,000) and the Northern Territory ($465,000) remained lower than the national average.
- Victoria was the only state where loan sizes did not reach new highs, attributed to declining property prices and economic factors.
According to Sally Tindall, data insights director at Canstar, these figures highlight the sheer scale of borrowing in Australia. “It’s just incredible to see how much people are borrowing,” she told SBS News. “In New South Wales, you’re looking at an average new owner-occupier loan size of $811,000. That’s huge, particularly if you add a standard 20 per cent deposit.”
Drivers of increasing loan sizes and investor activity
Despite the Reserve Bank of Australia’s decision to maintain the cash rate at 4.35 per cent, house prices have continued to climb, pushing borrowers to take out larger loans. According to Tindall, one major factor is that property prices have “defied gravity” despite 13 consecutive RBA rate hikes.
Another contributing factor is that some borrowers may be placing smaller deposits, increasing the amount they need to finance. While this trend is making it harder for first-home buyers, the market has shown some signs of shifting in their favour. In the December quarter, 29,788 first-home buyer loans were approved, a modest increase from the previous quarter.
Meanwhile, investor lending dipped by $1 billion (-2.9 per cent) compared to the previous quarter, marking the first decline since March 2023. Despite this, total investor loans for 2024 still reached $125.1 billion, significantly higher than in 2023.
Tindall notes that this shift in investor activity could benefit first-home buyers. “The fact that the markets called in very recently is helpful, particularly for first-home buyers who might actually find that they finally get a small window to climb through and get on that property ladder while investors are in the retreat.” she explained.
With the RBA’s next interest rate decision looming, analysts suggest any future rate cuts could influence borrowing behaviour. “A lot of people don’t borrow at capacity … but if a cash rate cut reignites interest in the market, if the cash rate cut gives some buyers that have parked themselves on the sidelines temporarily the confidence to go back into the market and start looking, if there’s more buyers in the market and not enough stock, what we typically see is prices go up.” Tindall said.
