Australia’s value of housing finance commitments stabilizes in August

Australia’s value of housing finance commitments steadied in August after dropping sharply in July. The value stabilized in the month, rising 0.2 percent sequentially after a 2.7 percent drop in the previous month. On year-on-year basis, the value of housing finance continued to drop with commitments falling 6.3 percent in the month. The number of housing finance commitments dropped 3 percent sequentially.

Owner-occupied finance, excluding refinancing was up 0.2 percent sequentially. Upgraders rose a larger 0.6 percent month-on-month. For first home buyers, finance dropped 1.2 percent sequentially. Investor finance growth, interestingly, slowed for the second straight month. It rose 0.1 percent sequentially after rising 0.5 percent month-on-month in the previous month.

In terms of trend, housing finance widely seems to be rolling over, stated ANZ in a research note. This is surprising as other data flow on housing market has been slightly stronger. Prices of house have continued to increase, while auction clearance rates have continued to be elevated and building approvals are around record levels.

Tighter surveyed lending conditions for developers continue to be a drag on finance for construction of new housing that dropped sharply in August. This implies that building approvals might be near to peaking. However, there is a record backlog of work that would continue to underpin construction activity growth in the coming year, according to ANZ. Overall the level of housing market activity is solid.