Australia’s housing finance approvals fall in December, suggesting only mild pull-back in residential construction

Australia’s housing finance approvals fell in December, with both owner-occupier and investor lending down in the month. Some softening in housing finance is consistent with the broad cooling in the housing market seen in late December.

The value of housing finance commitments retraced the previous two months’ gains, falling 2.5 percent m/m in December. Total finance is now 2.2 percent lower than a year ago, the first negative annual growth rate since August 2016. In trend terms, though, housing finance is down just 0.5percent y/y.

Both owner-occupier and investor lending fell in the month. The value of housing finance for investors fell 2.6 percent m/m in December, to be 10.5 percent lower over the year. In three month end annualized terms, however, the worst now appears behind us in terms of the slowdown in investor finance.

Owner occupier finance also fell, down 2.3 percent m/m in December, but this followed a strong 1.7% bounce the previous month, with approvals still up 5.6 percent y/y.

Finance for first home buyers slipped a touch in December (-1.4 percent m/m) but has stabilized at much higher levels than seen in recent years. Indeed, finance for first home buyers is still up 35 percent y/y and accounted for 11.7 percent of total finance.

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