Australia’s housing finance commitments again suffer in April, meet market expectations

Australia’s housing finance commitments were down again in April, in line with market expectations. The value of Australian housing finance commitments fell again in April, albeit not as sharply as the previous month. The weakness was again driven by the investor segment, while owner-occupier borrowing was flat. 

The share of borrowing by investors continues to fall, and at 42 percent is the lowest since 2012. New South Wales and Victoria have seen the sharpest declines, consistent with the rapid cooling in their respective housing markets in recent months.

Investors did return to the new property market, with finance for the construction of new dwellings mostly offsetting last month’s fall. However, further weakness in the new property segment from owner occupiers means that overall finance for the construction and purchase of new dwellings continues to trend lower. This suggests that building approvals will follow suit in the coming months.

Finance approvals for first home buyers in these two states are down 8 percent from the November 2017 peak. While falling house prices are broadly positive for these buyers, further credit tightening is likely to weigh on the segment.

"Looking forward, tighter credit conditions are likely to continue to bite, suggesting that housing finance will remain soft for some time yet," ANZ Research commented in its latest report.

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