This article is from the Australian Property Journal archive
The housing finance sector has astonished the market with a surprise jump in February, according to the latest figures from the Australian Bureau of Statistics.
According to the ABS, the number of loans issued increase by 1.1% to 59,050 loans in the month of February, after to a 0.4% fall recorded in January.
In addition, the value of home lending rose by 2.2% to $18.915 billion, after falling 1.3% in January.
HIA’s executive director of housing and economics Simon Tennent said that the mix of lending in the first few months of this year is good news for the building industry, with solid, sustainable increases in lending for new homes, alterations and additions and the construction of investment properties.
JP Morgan’s economist Jarrod Kerr said the unexpected strong home finance data showed a rebound from the contraction in January.
He added, a closer look at the value of home lending suggest that not only are punters taking out more loans, they are taking out loans of greater value.
However, Kerr said in annual terms, the data is less impressive.
“The growth in the value of loans to investors is now down 1.8%oya (after being up 1.6%oya in January), and the growth in the value of loans to owner occupiers has eased to 9.8%oya (down from 12% in January).
“Furthermore, the percentage of investors in the market remains low at 31% – down from a peak of 40% in October 2003.
“It appears that many investors remain reluctant to enter a market where the rental income yield is unattractive, and the chances of sustained house price appreciation any time soon are low,” he added.
Kerr said Reserve Bank officials probably will look through the jump in housing finance, and look more to longer-term trends in the rate of debt accumulation.
“JPMorgan maintains the view that given current elevated petrol prices (and fear of higher prices in the pipeline) and public apprehension surrounding the new industrial relations reform, the RBA will remain on hold until 2007,” Kerr concluded.
Tennent said after an encouraging rise, the proportion of first home buyers fell over the month, down from 18.6% in January to 17.9% in February, underlining the structural affordability problems that will keep a lid on a housing recovery for some time to come.
“Furthermore, the weakness continues in New South Wales, falling by 1.3% over the month and underlining the importance of HIA’s release yesterday of a blueprint a recovery in the new housing industry,” he added.
Increases in the number of owner occupied housing commitments (seasonally adjusted) in February 2006 compared with January 2006 were recorded in South Australia (up 395, 8.7%), Queensland (up 342, 2.7%), Western Australia (up 335, 3.8%), Victoria (up 98, 0.7%), Tasmania (up 55, 4.8%) and Northern Territory (up 37, 5.5%).
Decreases were recorded in New South Wales (down 216, -1.3%) and Australian Capital Territory (down 20, -3.2%). The trend increased in all states and territories except New South Wales, Northern Territory and Australian Capital Territory.
By Kathryn O’Meara
