Australian housing finance approvals grow strongly in November

Approvals for Australian housing finance saw strong growth in the month of November, with rises throughout each of the owner-occupied, investor and first home buyer segments. Approvals rose 2.1 percent on a sequential basis, while it was up 1.7 percent on a year-on-year basis. Owner occupied saw a rise of 2.7 percent sequentially and 11.5 percent year-on year, whereas investor saw a rise of 1.5 percent sequentially and a decline of 8.3 percent year-on-year. Investor borrowing’s year-on-year rate is the weakest since mid-2016. This is mainly due to the effect of APRA’s tighter macroprudential regulation.

Policy changes are also clear in the rising present of first home buyers, who took another step higher in New South Wales and Victoria in November. The number of monthly FHB approvals is now over 60 percent in New South Wales, and almost 50 percent in Victoria.

This is exerting upward pressure on prices at the lower end of the market. In six months of stamp duty discounts, the value of the bottom quartile of properties in Melbourne has increased 8 percent. In Sydney market, where overall prices haves dropped 2 percent in the same period, the value of properties in the bottom quartile has nudged higher by 0.5 percent.

“Following last week’s bumper building approvals result, today’s data on finance approvals for the construction or purchase of new dwellings suggest that there is still room for further upside in housing construction”, stated ANZ in a research report.

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