Housing is a ‘shining light’
ECONOMISTS believe the housing sector is strong despite a fall in the number of home loans approved in December.
The number of home loans approved in December fell 1.9 per cent, seasonally adjusted figures show, which was worse than the 0.9 per cent rise economists were expecting.
Total housing finance by value rose 0.2 per cent in December, seasonally adjusted, to $27.050 billion, the Australian Bureau of Statistics said on Tuesday.
CommSec economist Savanth Sebastian said the fall in the number of housing commitments in December was consolidation after a year of solid gains.
‘‘The value of housing finance was up about 15 per cent on a year ago,’’ he said.
‘‘It really does suggest that the housing sector is the shining light of the Australian economy.’’
Mr Sebastian said he was encouraged by the 0.4 per cent lift in the number of new loans approved to build new homes.
‘‘That’s the key area to look at, it suggests that construction activity will be the big driver of the Australian growth story this year,’’ he said.
‘‘Not only does it drive economic activity but it also puts a lid on property price gains, at a time when the Reserve Bank of Australia is hesitant to raise the cash rate because of the weak labour market.
‘‘So more supply coming on board will curb the significant price gains over the past 12 months.’’
Other data released by the ABS showed Australian capital city residential property prices rose 3.4 per cent in the December quarter, and were up 9.3 per cent in the year to December.
Mr Sebastian said he didn’t believe that residential property prices will rise as much in 2014 as they did in 2013.
‘‘Investors will be a lot more circumspect in paying higher prices and towards the end of the year you’ll hear more talk from the Reserve Bank about raising the interest rate,’’ he said.
JP Morgan economist Tom Kennedy said the gain in housing prices was broad-based, with all state capitals posting solid gains.
‘‘The housing market did turn the corner in 2013 and these gains are not just located in the big property markets of Sydney and Melbourne,’’ he said.
But a worrying aspect of the housing finance data was that it seemed first home buyers were being priced out of the market, Mr Kennedy said.
Owner occupiers were not well represented in the figures either, he said. The value of home loans approved for investment properties rose 2.9 per cent in December, while loans for owner occupiers fell 1.5 per cent.