Australian housing finance approvals resumed their decline in June after a momentary rise last month. Approvals have recorded declines in 6 of the past 7 months, and this follows last week’s CoreLogic Home Value Index where property prices on a national basis extended their run of declines to 10-straight months.
Housing Finance — June | By the numbers
- New Housing Finance Approvals (no.) to owner-occupiers fell -1.1% in June, compared to the market forecast for 0.0%. Approvals growth in May was trimmed to +1.0% from the initial estimate of +1.1%.
- By value, total lending commitments (ex-refinancing) fell -1.2%m/m to $A25.156bn (-8.4%Y/Y).
Housing Finance — June | The details
The declines in June’s headline figures were reflected by weakness across the categories. By value, lending commitments fell by -0.2%m/m to owner-occupiers to $14.744bn (-0.1%Y/Y), while investment lending fell by -2.7%m/m to $10.382bn — intensifying the annual pace of decline from -13.5% to -18.1%.
The value of lending to first home buyers weakened in the month (-6.0%), but activity has been strong over the past year (+22.6%) driven by state government assistance measures in New South Wales and Victoria. The ABS reported that first home buyers accounted for 18.1% of the number of owner-occupier loans written in June, which is the highest level since October 2012.
Refinancing commitments were down -2.9% in June (+1.0%Y/Y).
Over the quarter to June, the value of ‘new’ lending (excluding re-financing) declined -3.6% — the sharpest slowing since Q4 2015 — due mainly to slowing activity from the investor segment (-7.8%).
The number of owner-occupied loans fell in every state, except for Queensland (+2.1%), in June. Approvals in New South Wales fell -1.8%m/m and by -0.8%m/m in Victoria. There were also falls in Western Australia (-4.6%m/m), Tasmania (-2.0%m/m) and South Australia (-1.8%m/m).
Despite a stronger quarter for most states — only New South Wales recorded a decline — approvals have seen a broad slowdown over the past year.
State
|
June (m/m)
|
Q2 (q/q)
|
Annual (Y/Y)
|
NSW
|
-1.8%
|
-2.3%
|
-4.8%
|
VIC
|
-0.8%
|
+3.6%
|
-0.7%
|
QLD
|
+2.1%
|
+1.4%
|
-4.8%
|
SA
|
-1.8%
|
+1.4%
|
-5.4%
|
WA
|
-4.6%
|
+5.9%
|
-18.7%
|
TAS
|
-2.0%
|
+0.2%
|
+1.4%
|
Based on ABS 5,609.0
Construction related loan approvals were flat in June and little changed on the quarter (-0.3%). However, over the past year approvals in this category have declined by -8.1%.
Housing Finance — June | Insights
The weakness seen in today’s data broadly matches with other related indicators of late; building approvals, property prices and auction clearances, which are indicative of cooling residential property market conditions. This appears to be centered on the investor segment, which as noted by the RBA in yesterday’s statement accompanying its policy announcement, is in response to tightening lending standards and APRA’s measures to restrict the pace of credit growth to investor borrowers.
