Value of housing finance commitments stabilised in August: ANZ's Jo Masters

Value of housing finance commitments stabilised in August: ANZ's Jo Masters
Value of housing finance commitments stabilised in August: ANZ's Jo Masters

GUEST OBSERVER

The value of housing finance commitments stabilised in August following a sharp fall the previous month. Recent strength in investor finance appears to be waning.

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Value of housing finance commitments stabilised in August: ANZ's Jo Masters

Housing finance commitments for the construction of new houses weakened sharply, suggesting building approvals may be nearing a peak. Overall though, the level of activity in the housing market is strong and there is a significant backlog of work.

The value of housing finance commitments stabilised in August, rising by 0.2 percent m/m in August following a 2.7 percent m/m fall the previous month.

In annual terms, the value of housing finance continues to fall, with commitments down 6.3 percent y/y in August. The number of housing finance commitments fell by 3 percent m/m.

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Value of housing finance commitments stabilised in August: ANZ's Jo Masters

Owner-occupied finance excluding refinancing rose by 0.2 percent m/m, with a larger 0.6 percent m/m increase for upgraders. Finance for first home buyers fell by 1.2 percent m/m.

Interestingly, investor finance growth moderated for the second consecutive month, rising by 0.1 percent m/m in August compared with 0.5% m/m in July.

In trend terms, housing finance broadly appears to be rolling over (see Figure 1). This is surprising given that other data flow on the housing market has been somewhat stronger. House prices have continued to rise, auction clearance rates remain elevated, and building approvals are around record levels.

Tighter surveyed lending conditions for developers are continuing to weigh on finance for construction of new housing, which fell sharply in August, suggesting building approvals may be close to peaking (see Figure 2).

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Value of housing finance commitments stabilised in August: ANZ's Jo Masters

That said, there is a record backlog of work which will continue to support growth in construction activity over the coming year. 

Jo Masters is senior economist, ANZ and can be contacted here.

Tags: 
Building Approvals Housing Finance

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