Spring to bring more housing market activity: RP Data

An uptick in home buyer activity in spring is likely, according to RP Data head of research Tim Lawless.

“With interest rates looking stable and economic growth showing some improvement we may gradually see some improvement in housing finance numbers which ultimately points to an improvement in transaction volumes which were tracking about 17% below the five year average nationally in June,” Lawless writes on the RP research blog.

“We are likely to see more new listings enter the market as we move into spring, so an uptick in buyer activity would be a very welcome event for anyone looking to sell their home.”

Lawless says housing finance commitments are a good indicator of buying intentions and points to a recently released set of ABS data that shows an improvement in housing finance values from recent lows.

“Owner-occupier loans are up 5.9% between March and July of this year, while investor loans are up 3.1% between the April low and July this year,” Lawless says.

More recent indications of an improvement in the housing market have come from the August mortgage approvals from mortgage broker AFG, which come out one month ahead of official ABS data.

AFG recorded a 21% surge in mortgage approvals in August, with investors and first-time buyer numbers on the increase.

While August figures are typically stronger than previous months, AFG’s August 2011 figures trended well above seasonal expectations.

Lawless says an increase in investor activity is another indication of an improving market.

“Investor loans have shown a greater level of decline compared with owner occupiers, which is typically the case when market conditions move out of the growth phase; investor numbers tend to taper as capital growth leaves the market,” he says.

“Higher yields, more stock to choose from and improved buying power hasn’t been enough to attract a large number of investors back into the market.”

Currently, the owner occupier market is more active than investors, with the value of owner occupier loans commitments (excluding re-financing) down by 1.6% over the 12 months to July and investor loans are down 9.0%.

“Investors now equate to 38.2% of the value of all housing finance commitments excluding loans being refinanced,” Lawless says.