Housing Finance — August | By the numbers
- Owner-occupier housing finance approvals (excluding refinancing) lifted by 0.7% in August to 32,740 (seasonally adjusted), though this was below the 2.3% rise forecast by markets (prior rev: +4.4% from +4.2%). The decline in annual terms slowed to -5.1% from -8.4% (revised from -8.7%).
- The total value of housing finance commitments (excluding refinancing) increased by 2.9% in August to $A18.438bn (prior: +5.1%) to be down by 5.0% through the year (prior rev: -11.7%)
Housing Finance — August | The details
Total lending commitments by value (excluding refinancing) increased for the third straight month in August with a 2.9% rise to $18.438bn. This is 5.0% down on the level from a year earlier, though this pace of contraction was improved from -11.7%Y/Y in July and is now at its slowest rate since February 2018.
Looking at the segments, for the third straight month commitments to both owner-occupiers and investors increased. Owner-occupier commitments lifted by 1.9% to $13.555bn to be down by just 1.7% through the year compared to -7.9% in July. Investor commitments posted their strongest monthly rise in nearly 3 years with a 5.7% lift in August to $4.884bn, which is -13.0% on a year earlier but improved from the -21.2% contraction in July. Elsewhere, the value of approvals made for alterations to existing owner-occupied properties increased by 5.4% in August to $284.8m to be near-flat over the year (-0.1%) having improved from a 9.0% contraction year-on-year to July.
Refinancing commitments remain on the rise following a 7.7% increase in August to $9.436bn and is running at a 5.7% pace through the year — its strongest since July 2018. Owner-occupier refinancing was up by 8.4% in the month to $6.709bn to be 4.5% above the level from a year earlier, while investor refinancing elevated by 6.1% in August to $2.728bn and is up by 8.7% year-on-year — its fastest since April last year.
Turning to owner-occupier loan approvals, the total number (excluding refinancing) lifted for the 4th straight month in August rising by 0.7% to 32,740. In annual terms, the contraction slowed from -8.4% to -5.1% to be at its slowest pace since June last year. Approvals to purchase established dwellings firmed by 0.6% to 25,088 (-4.3%Y/Y), while construction-related approvals lifted by 1.1% to 7,652 (-7.7%Y/Y). Within the latter, loan approvals to purchase newly constructed dwellings (including from off the plan) lifted by 2.7% to build on an 8.7% rise in July, with the annual contraction slowing from -10.2% to -7.4%, while loans to fund new construction were up by 0.3% to August to 5,253 (-7.9%Y/Y). The ABS does not produce approval estimates for the investor segment.
The state-by-state breakdown of approvals and commitments is provided in the table, below.
The national rise of 0.7% in owner-occupier approvals was outpaced by a majority of states; Queensland (2.3%), New South Wales (2.1%), South Australia (1.9%) and Victoria (1.5%).
In the investor segment, activity looks to be picking up across the board, though it is still early days on this front. Notwithstanding, there were strong rises for the 2nd straight month in Victoria (9.5%), Queensland (10.4%) and Tasmania (9.8%).
Housing Finance — August | Insights
Today's report indicated that momentum in housing finance continues to gather pace with uncertainty over the federal election outcome and potential changes in tax policy now well and truly in the past, while recent RBA rate cuts and APRA's easing in guidance round credit assessment standards also appear to be having some impact. Reflecting this, attitudes towards house price expectations remain strongly on the rise according to the details from yesterday's Westpac-Melbourne Institue Index of Consumer Sentiment, though on the other hand there appears to be renewed concerns over affordability, particularly in New South Wales and Victoria.