This article is from the Australian Property Journal archive
DEMAND for housing finance has continued to weakened, falling 1.4% in March, as first home buyers continue to leave the market.
According to the latest Australian Bureau of Statistics data, housing finance approvals both in terms of value and number fell down 1.4% and 3.4% respectively in March.
The figures confirm housing finance commitments are slowing and will continue to present concerns for the undersupply issue facing the housing market.
The number of owner-occupied housing finance commitments fell by 3.4%, reflecting a continued decline in demand from owner occupiers (down 25% since October 2009) lead by a continuing exodus of first homebuyers (down 1.6% in March and down 67% since October 2009).
The proportion of first homebuyers seeking approvals decreased further in March to 16.1% from a peak of 28.5% in May 2009. The proportion of approvals that fixed interest rates remained stable in March at 2.1%.
On the other hand, investor demand was stronger (up by 3.0% in March).
ANZ Bank economist David Cannington said the demand from investors shows they still see value in the market despite increasing interest rates.
“Despite the interest rate hikes of late 2009 and March 2010 the investor segment continues to see value in the housing market with approvals up 3.0% (in value terms) in March to be up 8.3% in the last six months,” he added.
“Construction loan approval numbers fell in March (down 7.1% in the month) to be down 20.2% since October 2009. This suggests housing supply will continue to slow into 2010. This will leave the Australian housing market well short of the supply necessary to keep up with what is still very strong underlying demand.
“This data confirms our view that the shortage of housing in the Australian market will provide the fundamental economic forces to keep house prices growing in 2010 (although not at the growth levels seen in 2009),” he added.
Across States and Territories, Queensland recorded the smallest decline (falling 1.8% in March), followed by Tasmania and Victoria (down 2.2% and 3.5% respectively in March).
In annual terms the fall has been weakest in Victoria (down 11.3%).
Australian Property Journal
