This article is from the Australian Property Journal archive
DEMAND for housing finance has jumped in July due to investors, whilst first homebuyers activity has fallen to its lowest level since 1991, according to the REIA.
According to the Australian Bureau of Statistics, housing finance increased by 2.7% in July in addition to 1.1% gain in June.
The July data exceeded analyst UBS’ expectations of a 0.5% rise. Housing finance commitment is now 17.2% higher than a year ago.
According to the ABS, housing finance commitments was led by investment housing, which jumped 6.8% to $11,513 million, whereas owner occupied housing was flat with 0% at $17,058 million.
The proportion of first homebuyers as part of the total owner occupied housing figure, declined from 13.2% to 12.2% in July — the lowest figure since the series began in 1991.
The ABS also found that between June and July, the average loan size for first homebuyers fell $1,200 to $307,400, whereas the average loan size for all owner occupied housing commitments increased $500 to $327,500 for the same period.
THE Real Estate Institute of Australia’s president Peter Bushby said the figure for first homebuyers is very concerning and governments need to look at the issues affecting this important group.
“There is a chronic under-supply of housing and added to this many state and territories have abolished home buyer grants for established dwellings which has further undermined the confidence this group needs to enter the market,” he added.
According to the ABS, the total value of new construction jumped 6.8%, however the first homebuyers share fell to a new low of 7.3% from 8.1%.
“The July 2014 lending figures indicate a very stable market and with the recent jump in unemployment to a 12-year high, this should address any concerns of RBA about the housing market and allow for interest rates to be maintained at their current level,” Bushby said.
UBS senior economist Scott Haslem said the jump in investor lending of 6.8% is the fastest monthly gain in about a year, driven by a 5.1% jump in established and a 44% surge in the volatile (and smaller) new category.
“The jump in housing lending in July – led by investors – is consistent with a broad range of other housing data pointing to a re-acceleration of housing activity and prices early in 2H14.
“As we’ve been noting, at some point, the RBA will change its long-held policy outlook that a period of stability in rates remains prudent, with the trigger perhaps a lower AUD, or signs the economy is improving despite an overvalued AUD. Today’s business survey and strength in investor housing lending certainly suggest that time is getting closer, not further away,” Haslem said.
Property Review
