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Housing Market on Track

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Owner-occupants loans rose 10 percent in November, bringing the monthly total to $13.4 billion, 1.6 percent higher than in October, official figures show. The increase helped drive a larger than expected monthly increase of 1.8 percent in overall lending – beyond forecasts of a 1.4 percent gain – and lifted the value of first-time home buyer loan commitments to a 10-year high.

“The housing market is on its way back, that means more homes will be purchased and create flow-on demand to a raft of businesses including removalists, real estate agents and homewares retailers,” says CommSec chief economist Craig James.

Yet, JP Morgan economist Ben Jarman says, the growth is likely to be stable.“At the current pace of credit growth, households are still deleveraging, so housing is neither adding much upside to consumption nor is it a constraint to further monetary policy easing.”

The ANZ / Property Council of Australia’s latest quarterly survey shows that a pick-up in the building is yet to gain traction, suggesting that home buyer interest is concentrated on existing dwellings. The number of owner-occupier loans to purchase existing dwellings remained unchanged during November, while the number of owner-occupier loans to build new dwellings declined by 8.4 percent.

JPMorgan economist Tom Kennedy says the data shows the drop in approvals has now stabilised. “The data have been particularly volatile of late, but through the noise, there are signs that building approvals are stabilising following a period of prolonged weakness,” he says.

Maree Kilroy from BIS Oxford Economics says lower interest rates and easier lending is starting to drive the market once more.“The freeing up of credit, as seen in recent new mortgage loan growth, is starting to have a positive effect on new dwelling demand, with the increased churn of established dwellings encouraging upgraders towards new construction,” she says.

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