Australian housing finance commitments continued to accelerate in September on broad-based gains across the owner-occupier and investor segments. A supportive policy framework has helped drive the recovery forward since the mid-May reopening of the national economy.
Housing Finance — September | By the numbers- Housing finance commitments ($ value, ex-refinancing) lifted for a 4th straight month with a 5.9% rise coming through in September to a total of $22.535bn (prior 12.6%m/m). Growth in annual terms increased from 19.3% to 25.5% — its fastest since November 2013.
- Owner-occupier commitments lifted by 6.0%m/m to $17.26bn, with the annual pace rising to an 11-year high of 33.8% (prior: 13.6%mth, 29.2%yr).
- Refinancing commitments to owner-occupiers increased by 9.4% in September to $7.944bn to stand 30.8% above the level from 12 months ago.
- Investor commitments advanced by 5.2% for the month to $5.275bn (prior: 9.3%) as growth through the year turned positive for the first time since April at 4.2% (prior: -4.6%).
Housing Finance — September | The details
Australia's housing market has rebounded sharply out of the shutdown with borrower-accepted commitments rising for a 4th consecutive month, with September's 5.9% lift bringing the level to a near-record high of $22.535bn. Over the period since the reopening, commitments are up 38% on May's low of $16.3bn, while in the first 4 months of 2020 commitments were averaging around $19.3bn per month. Clearly, stimulatory policy has helped drive the rebound, with support coming from low rates, the Federal Government's HomeBuilder scheme as well as government initiatives targeted at first home buyers.
Commitments over the 3 months to September came in at $62.7bn to be up by 20% on Q2's aggregate of $52.3bn. This was mainly driven by a 23.1% quarter on quarter surge to owner-occupiers (coming after a 9.4% fall in Q2), while the investor segment posted an 11.3% quarter on quarter rebound (was -15.1% in Q2).
A key factor in the rebound has been the first home buyer segment, with commitments (ex-refinancing) rising a further 5.6% in September to be up by 43% since the low in May. Approvals to the segment have been stronger again, lifting by 6.0% in September for an overall rise of almost 52% since the reopening.
On the owner-occupier approvals numbers, as the chart (below) shows, loans to purchase established homes have well and truly eclipsed their pre-pandemic level rising to a near 3-year high in September. Meanwhile, construction-related approvals have soared since the reopening, likely in response to the HomeBuilder scheme, with loans to construct new dwellings up 69.2% on a year ago and loans to purchase newly constructed dwellings up 19.3% over the year.
The summary of the state data is provided in the table, below. The standout here is the weakness in Victoria, likely as a result of the state lockdown. In most of the other states, the momentum accelerated across both the owner-occupier and investor segments in September.
The next couple of charts show owner-occupier and investor commitments (ex-refinancing) for each state.
Housing Finance — September | Insights
The owner-occupier driven rebound in the Australian housing market continued at pace in September, while a much more gradual recovery is in motion in the investor segment. The reopening of the economy and a supportive policy framework have been the key factors driving the recovery and there is further to run yet. The impact of these developments was evident in today's update from CoreLogic with national property prices ending a run of 5 consecutive months of declines with a 0.4% rise in October (3.9%yr).
