More signs of stabilisation in Australian housing finance: Westpac

EXPERT OBSERVER

The June housing finance approval figures were consistent with stabilising market conditions through the middle of 2019.

The number of owner occupier loan approvals rose 0.4%mth, in line with expectations but still down 13.6%yr.

The total value of investor loans also rose 0.5%mth with the combined total value of owner occupier and investor loans up a firm 1.9%mth but with coming off weak May reads (–1.9% and –2.7% respectively).

By state, the number of owner occupier approvals rose 0.7%mth in NSW and 0.3%mth in Qld but declined 0.6%mth in Vic – the three big eastern states having recorded the biggest falls over the last year (in the 13-18%yr range). Approvals posted firmer gains in WA (1.1%mth), SA (+2%mth) and Tas (+2.1%mth), these states having seen milder declines over the last year in the 4-7% range.

As the volume and value mix suggests, average loan size rose in the month, the detail showing gains across all states but concentrated in the 'upgrader' segment.

Construction-related finance approvals declined 2%mth, reversing all of the previous month's gain although the pace of decline still looks to have moderated since the start of the year suggesting non high rise dwelling approvals should start to level out in coming months.

Timelier data on auction activity, sales and prices have shown a clear improvement through Jun-Aug with a particularly strong lift in auction clearance rates since the start of July.

Reduced uncertainty around housing-related tax policy following the Federal election and the RBA's back to back rate cuts in June and July have been key supports.

Despite the shift, sales activity still looks to be running at low levels by historical standards (judging by turnover data to June and the number of auctions through July-August).

The next few months of approvals data and the performance of auction markets as we head into the Spring selling season will an important gauge of the extent to which the shift is seeing a sustained pick up.

MATTHEW HASSAN is a Senior Economist for Westpac