First-home buyers and mortgage numbers down, but banks boost their dominance
June housing finance data failed to deliver a fillip to the property market, with fewer first-time buyers and the total value of mortgages declining.
According to the Australian Bureau of Statistics, the number of first home buyer commitments as a percentage of total owner-occupied housing finance commitments fell from 15.4% in May 2011 to 15.2% in June 2011, with the average loan size for first home buyers falling $6,000 to $280,200.
The average loan size for all owner occupied housing commitments increased fractionally – up $900 to $288,100 for the same period.
On a seasonally adjusted basis, the total value of mortgages declined by 1.4% in June to $20.18 billion.
“New home lending is a leading indicator of residential building activity so unfortunately the current low number of loans reinforces HIA’s view that dwelling starts will fall by at least 14% in calendar year 2011,” says HIA senior economist Andrew Harvey.
“This low level of residential building activity is not only a negative for the Australian economy, but is not sustainable in a market which already poses major home affordability challenges, particularly for first-time buyers.”
Source: HIA
Banks were the only ones to benefit over the month, with lending volumes rising by 0.2% over June with non-banks suffering a 1.1% drop and permanent building societies a 0.9% fall.
The banking sector's share of total mortgage approvals increased to 92.5% in June (up from 92.4% in May), to be at the highest share since March 2009. This reflects both a solid increase in bank-sourced housing finance (10.2% higher since February 2011) and weakness in housing finance from non-banks which is now at its lowest level since November 2008
The combined bank loan book now total just over $1 trillion dollars comprising $724 billion worth of owner occupier loans and $318 billion worth of investment loans.
The number of commitments for owner occupied housing finance was flat with 49,175 mortgages arranged over the month.
The continuing struggles of the construction sector were reflected in stagnant construction loan figures, down 0.8% to $4.8 billion.
Investment housing fixed loans decreased by 4.4% over June to $6.06 billion.
Westpac notes the housing finance to owner-occupiers was flat in June, but was in line with expectations.
It notes the level of housing finance to owner-occupiers remained relatively subdued, with the sector facing “a number of headwinds.”
The detailed data for owner-occupier finance was mixed, with Westpac noting new lending (i.e., ex-refinancing) was a little stronger, but finance for the construction of new dwellings edged lower.
Queensland continued to disappoint, Westpac notes.