Australian housing finance commitments have surged by 10.5% in January following on from an 8.6% rise in the month prior, with construction loans responding to the support of the Federal Government's HomeBuilder scheme and demand more generally being driven by low rates and state government incentives for first home buyers.
Housing Finance — January | By the numbers
- Housing finance commitments ($ value, ex-refinancing) posted an 8th consecutive monthly rise with a 10.5% surge coming through in January to $28.8bn; well above the 2.5% lift expected and this was after an 8.6% rise in December. Commitments over the year are running at a 44.3% pace, up from 31.2%.
- Owner-occupier commitments led with a 10.9%m/m acceleration to $22.1bn (prior: 8.7%m/m), elevating annual growth to 52.3% from 38.9%.
- Refinancing by owner-occupiers lifted by 11.1% in January to $7.7bn (14.2%yr) after an 11.3% rise in December.
- Investor commitments advanced 9.4%—its fastest rise in a single month since September 2016—to $6.6bn to be 22.7% higher over the year (from 10.9%).
Housing Finance — January | The details
The acceleration in Australian housing finance activity continued into the new year supported by low rates, the Federal Government's HomeBuilder scheme and additional state government incentives for the first home buyer segment. As such, the strength in the first home buyer segment outpaces growth in the upgrader segment and for owner-occupiers as a whole.
Construction loans were very strong in January in rising by 15.7% in the month to be up 141% on a year earlier. The eligibility criteria for HomeBuilder was widened from the start of the year (price cap in New South Wales lifted to $950k and $850k in Victoria from $750k previously), though the grants have tapered in size to $15k from $25k.
On the investment side, growth in commitments has accelerated over recent months with January's 9.4% rise following gains of 8.2% in December and 6.0% in November, lifting the annual pace to 22.7% — its strongest since April 2017.
On the approvals numbers for owner-occupiers, construction-related approvals reflect the boost from HomeBuilder rising by another 15.7% in January to 112.0%yr. Within this, approvals for the construction of new dwellings jumped 20.3% in the month (161.8%yr) and approvals for dwellings newly constructed lifted by a much smaller 2.2% in January (28.6%yr). Approvals to purchase established dwellings were up by 10.8% for January for an annual rise of 29.8%, which is its fastest since September 2009.
The table below summarises the monthly and annual moves across the states for each of the major segments. In general, the states outside of the major two of New South Wales and Victoria have driven the upswing.
Housing Finance — January | Insights
Policy stimulus continues to boost momentum in the nation's housing market and this is now translating into stronger house prices, with CoreLogic's home value index rising at its strongest monthly pace in the history of the series as capital city prices advanced by 2.0% for the month in February, though prices were only modestly higher over the year at 2.6%.
