This article is from the Australian Property Journal archive
HOUSING finance commitments made an unexpected gain of 2.2% in October, according to the Australian Bureau of Statistics.
However housing finance remains 11.8% below the same period last year.
During the month, owner-occupier approvals were up 2.8% and investor approvals rose 1.1% in the month. The number of owner-occupied housing finance commitments (ex-refinancing) increased 1.8% in October to be 25.8% lower over the year.
The proportion of total housing finance commitments taken out at fixed rates rose to 6.9% in October (from 4.4% in September) to be at the highest proportion since July 2009.
ANZ economist David Cannington said following a dramatic rise in 2009, first home buyer activity continues to stabilise at normal levels.
“Much now depends on sentiment in the investor and upgrader segments. While upgrader finance continues to grow at a steady rate (3.5% for the month in October), investors are showing more caution to be 4.4% lower over the last six months (up 1.1% for the month).
“As this data pre-dates the November increase in mortgage rates, we expect further weakness in new housing credit for the remainder of 2010 and into 2011,” he added.
Cannington said weak growth in house prices combined with the increased cost of servicing housing debt will continue to lower the incentive for homebuyers to rush into the market.
“Despite stable economic growth and solid gains in household income, housing market activity should continue to remain subdued in the near term,” he continued.
Across states and territories the number of owner-occupier housing finance commitments increased 1.4% in New South Wales, 1.9% in Victoria and a solid 3.6% in Queensland, while falls were recorded in South Australia (-0.8%) and WA (-0.9%).
The value of construction finance commitments fell 2.9% in October to be 24.9% below levels a year earlier. Construction for investor housing in October was relatively weak (down 7.2% for the month) while finance for owner occupier construction was down a more moderate 1.4% (despite being 32.8% lower compared to October 2009).
Australian Property Journal