This article is from the Australian Property Journal archive
DEMAND for finance from first homebuyers has risen for the first time in over 10 months, according to the Australian Bureau of Statistics.
The number of owner-occupied housing finance commitments increased by 1.9% in May.
Demand from first homebuyers rose for the first time since September 2009 when the Reserve Bank started its tightening cycle with six interest rates rises since October last year.
Investor and upgrader demand were also higher, up 1.0% and 0.7% respectively excluding refinancing.
The value of total housing finance commitments increased by 0.7% in May (up 0.6% excluding refinancing), however owner occupier approvals value were 0.3% lower to be down 0.7% excluding refinancing.
In annual terms, the value of owner-occupier commitments excluding refinancing is now 18.9% lower than in May 2009. In contrast the value of investor approvals was up by 2.6% in the month to be 17.3% higher than in May 2009.
ANZ economist David Cannington said the drop-off in first homebuyers share of total housing finance commitments appears to have troughed with the number increasing for the second consecutive month (up 0.2% in May and 0.1% in April) to remain steady at 22% of total housing finance approvals (excluding refinancing).
Cannington said more housing finance applicants are seeing value in fixed rate commitments as the proportion of housing finance approvals committed at fixed interest rates increased to 3.7% in May (from 2.4% in April).
“The improved housing finance approvals data for May, both in terms of value and number, indicates that the rapid falls in housing finance that we’ve seen since late-2009 are behind us,” he added.
In trend value terms, total housing finance commitments fell 0.4% in May (excluding refinancing) compared to 0.8% lower in April, while owner-occupier commitments are 1.4% lower in May (compared to 2.2% lower in April).
The largest monthly increase in the number of housing finance commitments was in Northern Territory (increasing 7.7% in May) followed by Queensland (up 3.8% in May) and New South Wales (up 2.3%). In annual terms the fall in housing finance commitments continues to be the least in Victoria (down 13.6%).
“In a positive sign for the supply of housing the value of construction finance approvals increased for the first time since October 2009 (increasing 5.0% in May).
“Todays data indicates that after a period of weakness in housing finance, the underlying fundamentals of the housing market will prevent any substantial collapse in house prices or housing finance,” he continued.
“We expect that looking further into 2010 investors will continue to see value in the housing market and, while todays data shows some life in housing construction, the underlying market requirement for owner-occupier housing will continue to outstrip supply,” Cannington concluded.
Australian Property Journal
