National housing market takes yet another hit

THE outlook for Australia’s housing market has taken another blow after the number of owner-occupier mortgages approved in August fell far more than economists had expected.

Home loan approvals for owner-occupiers fell 2.1 per cent in August, surpassing market expectations of a 1.4 per cent fall.

The value of total housing finance offered to customers was down 2.1 per cent at $30.67 billion for the month, according to seasonally adjusted figures released yesterday by the Australian Bureau of Statistics.

The value of new home loans approved for owner- occupiers was down 2.7 per cent, while the value of investor loans was down 1.1 per cent.

Analysts said that with property prices tending to follow the expansion or contraction of credit availability, the fall in loan approvals suggested home values were likely to keep sliding.

“We expect investor credit to remain weak through the remainder of this year and into 2019 as the combination of stricter lending standards and falling house prices weigh on lending behaviour,” JP Morgan rate strategist Ben Jarman said. “Housing finance data corroborates the other housing-related data flow, with building approvals, auction clearance rates and house prices all taking on a softer tone.”

The value of housing credit offered to would-be borrowers was down 14 per cent in August compared with the same period a year earlier.

That was the heaviest year- on-year fall for any month since 2010, ANZ senior economist Daniel Gradwell said.

The weakness was unsurprising and already factored into ANZ’s house price forecasts, Mr Gradwell said.

Westpac economist Simon Murray said in a report that the detail on the size of loans offered to investors showed a “softening” trend, particularly in NSW and Victoria, although Queensland was “trending up”.

“Overall, the finance data is consistent with the continued cooling in market conditions evident in auction markets and prices,” Mr Murray said.

Figures released this week by property research house CoreLogic showed capital city home prices were down 4.1 per cent on the same time last year.

The Australian dollar moved little after the housing finance figures were released at 11.30 but dipped in afternoon trade and was buying US71.21c late yesterday. AAP