Housing Finance — January | By the numbers
- Housing finance approvals to owner-occupiers (excluding refinancing) fell by 1.2% in January to 31,801. The market forecast was for a 2% decline (prior revised: -8.0%m/m from -8.2%). Approvals have fallen by 14.7% through the year (prior rev: -14.0%Y/Y).
- The total value of housing finance commitments (excluding refinancing) fell by 2.1% in the month to $A17.12bnbn — its lowest level since April 2013 — with the annual decline at -20.6% (prior rev: -19.3%).
- The value of commitments to owner-occupiers (excluding refinancing) fell by 1.3% in the month to $12.45bn — its weakest since May 2015 — to be down by 17.1% over the year.
- Investment commitments (excluding refinancing) in value terms fell by 4.1% in January to $4.67bn — its lowest since October 2011 — to take the annual decline to 28.6%.
Housing Finance — January | The details
Housing finance commitments continue to deteriorate both in terms of approvals and value. For clarification, the ABS refers to a housing finance commitment as a firm offer from a financial institution to provide finance to which the borrower has accepted. The commitment needs to have been approved by the lender and the borrower to have been issued with the loan contract.
The total value of housing finance commitments excluding refinancing arrangements made during January fell by 2.1% (or $372.1m) to $17.12bn. By segment, commitments to investor borrowers tumbled by 4.1% (-$202m) and owner-occupier commitments contracted by 1.3% (-$170.1m). Commitments made to owner-occupiers for alterations and additions were down by 26.4% in the month to $245.1m.
The total value of refinancing fell by 3.9% ($328.6m) to $8.188bn, which included a 4.3% fall (-$254m) from owner-occupiers and a 2.9% decline (-$74.6m) from investors. Click on the charts to expand.
By approvals — measuring the number of approvals written — total commitments to owner-occupiers excluding refinancing fell by 1.2% in January to 31,801. Within this figure, approvals to purchase established dwellings fell by 0.6%, while construction-related approvals were down overall by 3.0%; with approvals to purchase newly constructed dwellings -9.5% and approvals for construction -0.2%.
The ABS does not provide approvals detail for investment commitments.
The state-level detail showed that approvals to owner-occupiers were broadly weak in January with; New South Wales -4.9%, Victoria +0.4%, Queensland -2.4%, South Australia -0.7%, Western Australia -0.7% and Tasmania +2.4%.
The underlying detail highlighted that the weakness was led mostly by non-first home buyers, in particular in New South Wales (-6.4%), Queensland (-4.5%) and Western Australia (-2.3%).
Approvals to first home buyers were broadly flat (-0.3%) on a national basis in January. However, New South Wales (-4.4%) was the only area of weakness with gains for all other states; Victoria +1.3%, Queensland +5.3%, South Australia +2.6%, Western Australia +0.7% and Tasmania +1.3%.
From a value perspective, commitments to owner-occupiers excluding refinancing declined in every state with the exception of Queensland (+2.3%). The detail was; New South Wales -2.2%, Victoria -0.6%, South Australia -0.7%, Western Australia -0.2% and Tasmania -1.9%.
Meanwhile, the value of investment commitments continues to tumble recording a 4.1% fall in January across the nation, which increased the annual decline to -28.6%. In January alone the details were; New South Wales -6.1%, Victoria -1.5%, Queensland -3.3%, South Australia -2.1%, Western Australia -2.2% and Tasmania -13.0%.
As regular readers would be aware, the ABS now publishes housing finance data in the new Lending to households and businesses series. To stay across the greatly expanded level of detail now available through this new series, we have compiled all the key details into this summary table, below.
Housing Finance — January | Insights
This update showed a continuing deterioration in housing finance, though it is worth exercising caution when analysing January's figures due to seasonal impacts. Activity for both owner-occupiers was not as negative as expected in this release, though the deterioration on the investor side showed few signs of stabilising. The headwinds from tight credit standards, declining property prices, and uncertainty regarding the upcoming federal election appear to remain strong.
