Housing confidence at 18-month high: Westpac

Increased confidence in the housing sector is the only positive aspect to emerge from Westpac/Melbourne Institute’s latest survey of consumer sentiment.

Against a backdrop of overall sentiment falling 8.3% in July, confidence in the housing sector increased by 3.3%, reaching its highest level since January 2010.

The improvement in housing market sentiment comes as ABS lending figures for May reveal owner-occupier financing commitments increased by just 2.2% to $14 billion on a seasonally adjusted basis, compared to stronger gains for commercial lending (up 8.7%) and personal lending (up 3.8%).

According to RP Data, national city dwelling values have fallen 2.3% over the last 12 months while properties for sale listings have reached 280,000 compared with 217,000 at the same time last year.

Westpac chief economist Bill Evans attributes the improvement in housing confidence to modest recent falls in house prices, improving affordability.

The survey found the majority of respondents still expect house prices to rise, though Evans notes that the majority has “shrunk noticeably since we last asked the question back in April”.

“Recognition that houses have become a little more affordable might improve sentiment but concerns that prices may fall further are likely to continue to restrain households’ buying intentions,” Evans says.

Buying intentions may also be tempered by a 16.5% drop in the confidence of mortgage holders, due to the RBA persisting with “its strongly hawkish rhetoric”, he said.

“This is continuing to undermine confidence amongst households who it would appear are incredulous that such a policy is favoured given the current circumstances,” Evans says.

The ABS figures reveal that total commercial finance commitments rose 8.7% on a seasonally adjusted basis in May to $32 billion, compared with $29.5 billion in April – their highest level since September 2009.

Fixed commercial loans increased 9% following an 11.2% fall in the previous month, while revolving commercial credit commitments rose 8% during May.

Personal loans ticked up by 3.8% to just over $7 billion.

Leasing finance fell by 5.7% in May on a seasonally adjusted basis, reversing rises of 2.1% in April and 11.2% in March 2011.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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