Hous­ing fi­nance trends lower

Port Douglas & Mossman Gazette - - FRONT PAGE -

THE hous­ing fi­nance re­lease for Au­gust was weaker than the mar­ket had ex­pected. The mar­ket fore­cast was for a 2.5 per cent fall in the month.

In the event, the num­ber of loans to owner oc­cu­piers fell 3.9 per cent in Au­gust, fol­low­ing a 2.1 per cent rise in July. As a con­se­quence, an­nual growth slowed sig­nif­i­cantly, from 15.6 per cent in July to 9.5 per cent an­nu­ally.

Queens­land was one of the worst per­form­ers.

And the lack of first home buy­ers in the mar­ket has been a ma­jor con­trib­u­tor to the weak fig­ures over­all.

Ab­stract­ing from the month-to-month vo­latil­ity, monthly trend growth slowed to 0.6 per cent in Au­gust, down from 1.0 per cent in July and a 2013 peak of 2.5 per cent in April.

Look­ing at the com­po­nent de­tail, the num­ber of loans for the pur­chase of es­tab­lished and new dwellings fell 4.6 per cent and 4.0 per cent re­spec­tively in the month. Con­struc­tion loans pro­vided a par­tial off­set, ris­ing 2.2 per cent.

How­ever, over the year, loans for the pur­chase of new dwellings are up 25 per cent and loans for ex­ist­ing homes are up around 9 per cent; in con­trast, con­struc­tion loans are up just 5.3 per cent.

Tak­ing a closer look at es­tab­lished dwelling loan ac­tiv­ity, re­fi­nanc­ing ac­tiv­ity fell a mod­est 1.0 per cent in Au­gust. As such, the num­ber of loan com­mit­ments to owner oc­cu­piers ex- re­fi­nanc­ing was weaker still at -5.3 per cent; that left the monthly trend pace at just 0.3 per cent. By state, the weak­ness was broad­based in Au­gust. WA and Queens­land saw the largest de­clines, fall­ing 5.2 per cent and 4.4 per cent re­spec­tively. Loan ac­tiv­ity also fell around 2.5 per cent in SA and NSW.

The fall in Vic­to­ria was more mod­est at -1.0 per cent.

More broadly, the state de­tail con­tin­ues to show that the east­ern states are out­per­form­ing. The key to this out­per­for­mance has been up­grader and in­vestor ac­tiv­ity, spurred on by his­tor­i­cally-low in­ter­est rates.

In con­trast, first-home buyer (FHB) ac­tiv­ity is weak­est in the east. NSW and Queens­land FHB ac­tiv­ity has been his­tor­i­cally weak through­out 2013; and in Vic­to­ria, ac­tiv­ity fell away in Au­gust fol­low­ing changes to as­sis­tance in July. At the na­tional level, the pro­por­tion of all loan com­mit­ments made up by FHBs fell a fur­ther per­cent­age point in Au­gust to 13.7 per cent, the low­est level since April 2004.

The loan value data also high­lights the sub­stan­tial di­ver­gence be­tween FHB ac­tiv­ity and the rest.

Whereas loans to in­vestors and up­graders are up 26 per cent a year and 20 per cent a year re­spec­tively, FHB loans are down 19 per cent a year.

Ahead of the Au­gust re­port, ap­provals were show­ing a clear re­sponse to lower rates.

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