Australia’s housing credit growth to remain strong in near future

Australia’s February credit growth came in slightly above market forecasts. Housing credit growth continues to be stable; however, in recent months, it has moderated slightly. Business credit growth continues to be stronger. But recently, commercial loan approvals have weakened.

For the past two –and-half years, housing credit has remained stable, growing 0.5-0.6% m/m in almost all the months in that period. In the last few months, growth has moderated slightly, but is consistent with the housing market activity moderation. Going forward, overall housing credit growth is expected to remain strong, according to ANZ.

In recent months, owner-occupier housing credit growth has bolstered, in line with rebound in loan approvals for this segment. The strong underlying demand from owner-occupiers is expected to continue, added ANZ.

In February, investor housing credit rose sharply to the fastest rate in six months. However, the sharp increase comes after a period of weak growth and might reflect statistical volatility. But investor housing credit growth is seen stabilizing and might imply that the effect on this segment from 2014’s regulatory changes have greatly run their course, according to ANZ. However, investor housing credit growth is unlikely to recovery sharply, added ANZ.

Meanwhile, solid growth was seen in business credit in February. Growth seems to have moderated slightly in recent months along with a drop in commercial finance approvals. The approvals level continues to be in line with strong near-term growth in business credit.