Australian housing finance recovers in October, further credit tightening to weigh on housing market

Australian housing finance recovered in October, with some rebound throughout each of the owner-occupier first home buyer, and investor segments. On a sequential basis, housing finance rose 3 percent in October, although it was not sufficient to counter the sharp decline from the previous month. Monthly finance approvals are still over 10 percent lower than a year ago.

The headline figure was mainly driven by owner-occupiers, with growth of 4.8 percent on a sequential basis. Investor approvals also rose 0.6 percent sequentially. While this is just mild growth for the investor segment, it is the first rise since February this year – arresting a stable fall of 17 percent through that period.

In the owner-occupier space, first home buyers continue to enter the market at a strong pace, noted ANZ in a research report. In terms of dollars, the share of housing finance to first home buyers reached 13.4 percent in October, which is the largest share since 2012. The absolute number of first home buyers is still lower than the stimulus-induced peak of 2009-2010; however, it seems to be settling around strong levels. The stamp duty discounts on offer throughout New South Wales and Victoria, as well as the falling prices seem to be rebounding home ownership rates.

“Although a solid monthly result, the prospect of further credit tightening is likely to continue to weigh on the housing market and finance approvals from here. Still, a sustained up-tick in this data will be one of the things we are looking at for evidence of stabilisation”, added ANZ.

At 12:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at -27.3246, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -48.1996. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex