Hous­ing is a ‘shin­ing light’

Port Douglas & Mossman Gazette - - REAL ESTATE -

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.

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