Australian housing finance approvals down further in April

Australian housing finance approvals to owner-occupiers slid further in April, though the total value of lending to the segment lifted in the month, as investment lending showed further weakness. However, these data pre-date several significant developments including the federal election outcome, the proposal by banking regulator APRA to ease loan serviceability criteria and the Reserve Bank of Australia's rate cut at the June Board meeting. 

Housing Finance — April | By the numbers

• Housing finance approvals to owner-occupiers (excluding refinancing) fell by 1.1% in April to 30,833 -- the market forecast was for a decline of 0.3% (prior rev: -2.6% from -2.8%). The annual pace of decline was little changed at -13.5% from -13.6%. 

• The total value of housing finance commitments (excluding refinancing) was relatively steady at +0.2% in April to $A17.0bnbn (prior rev: -2.9% from -3.2%), which at that level are down by 17.3% over the year (prior rev -18.0% from -18.4%). 

Housing Finance — April | The details 

Across the segments in nominal terms for April, lending to owner-occupiers excluding refinancing increased by 1.0% to $12.6bn (-13.8%Y/Y) and commitments to investors excluding refinancing fell by 2.2% to $4.4bn (-26.0%Y/Y). Refinancing saw a 0.6% fall to $8.3bn (-10.2%Y/Y), with declines from owner-occupiers (-0.7%m/m, -8.3%Y/Y) and investors (-0.3%m/m, -14.4%Y/Y). Lending to owner-occupiers for alterations to existing properties eased by 0.4% to $275m in the month to be down by 11.6% through the year. 

       

Loan approvals to owner-occupiers (by number) fell by 1.1% in the month and are down by 13.5% for the year. Approvals to purchase established properties fell by 0.6% in April to 23,457 (-13.8%Y/Y). Construction-related approvals to owner-occupiers were down by 2.8% in April to 7,376 (-12.7%Y/Y). That resulted reflected weakness for loan approvals to fund construction, which fell by 5.2% to 5,266 (-6.0%Y/Y). Approvals for newly constructed dwellings lifted by 3.7% to 2,110 but remain well down over the year at -25.9%Y/Y. The ABS does not produce approval estimates for investors. 

The state-by-state details are summarised in the table, below, across segments and buyer type. 

The chart, below, tracks owner-occupier approvals (excluding refinancing) on a state-by-state and national basis. 

  

Lastly, the next chart shows the value of lending commitments excluding refinancing for investors across the states. 

Housing Finance — April | Insights 

There was continued weakness for housing finance in April, however these data pre-date recent developments that should be supportive, which include the federal election outcome, APRA's proposal to easing serviceability assessments, the RBA rate (with the prospect of more to follow), slowing price declines according to CoreLogic's latest data and improved signals from auction clearances. To what extent these factors will impact housing finance demand we will only know in a few months' time.