Housing Finance — December | By the numbers
- The total value of housing finance commitments (excluding refinancing) surged by 4.4% in December to $19.637bn to easily beat the median forecast for a 1.6% rise and follows a 1.9% increase in November (revised from 1.8%). In annual terms, commitments accelerated by 14.0% through the year; up from a 3.3% pace just one month earlier to now be running at their fastest pace in 33 months.
- Owner-occupier housing finance commitments posted their sharpest increase in a single month since August 2015 rising by 5.1% in December to $14.196bn (prior rev: 1.6%), driving the annual pace from 5.7% to 17.9% — its fastest since August 2017.
- Investor commitments increased by 2.8% to $5.44bn (prior rev: 2.5%), which resulted in the annual pace swinging from -2.4% to 4.9% and is now expanding for the first time since August 2017.
- By number of approvals made to the owner-occupier segment nationally;
- Loans written to purchase established dwellings advanced by 2.9% to 20,619 (2.3%yr)
- Loans for the purchase of newly built dwellings were up by 5.6% to 3,692 (18.9%yr)
- Loans for construction lifted by 5.1% to 3,185 (-3.4%yr)
Housing Finance — December | The details
December's 4.4% rise in housing finance commitments was the strongest month-to-month increase recorded since September 2016 that dates back to a time when the last upswing was about to take place after the Reserve Bank of Australia (RBA) had twice lowered the cash rate earlier that year. Fast forward to 2019, the key themes supporting this current upswing have been; 3 RBA rate cuts, an easing in macroprudential controls and the removal of uncertainty relating to changes in taxation policy following the federal election outcome.
The combination of these factors began to take hold from the second half of the year (see chart, below). In Q3, the total value of commitments increased by 7.5%, which was its first quarterly rise in 2 years. In the quarter just completed, commitments lifted by another 6.7%, led by a 7.8% rise from the owner-occupier segment — its fastest quarterly increase since Q3 2015 — and a smaller 4.0% rise from investors. Further highlighting the remarkable pivot that occurred, total commitments were expanding at annualised pace of around 35% over the second half of 2019 compared to contracting by around a 6% annualised pace in the first half.
Looking at the state-based details, owner-occupier commitments in December expanded in New South Wales 3.9% (22.5%yr), Victoria 7.5% (19.4%yr), Queensland 5.9% (22.0%yr), South Australia 2.4% (5.1%yr) and Western Australia 3.8% (9.3%yr). Tasmania is the only state in contraction, falling by 1.0% in the month and 8.7% lower through the year.
For Q4, New South Wales led the gains up by 10.9%, followed by Victoria (7.7%), Queensland (6.8%), South Australia (4.6%), and Western Australia (2.4%). Tasmania fell by 4.9%.
In the investor segment, the details in the month were; New South Wales 2.6% (-3.3%yr), Victoria 2.4% (14.3%yr), Queensland 6.9% (14.6%yr), South Australia 3.0% (1.9%yr) and Western Australia 0.0% (6.3%yr), while Tasmania fell by 5.1% (3.5%yr).
The quarterly rates were mixed, with increases for New South Wales (3.8%), Victoria (6.0%) and Queensland (8.0%), as South Australia (-3.3%), Western Australia (-0.5%) and Tasmania (-2.9%) contracted.
Housing Finance — December | Insights
