Housing Finance — July | By the numbers
- Housing finance commitments (ex-refinancing) in value terms lifted by 8.9% in July to $18.917bn (median forecast was for a 2.0% rise) following on from a 6.4% advance in June as the economy started to reopen. Annual growth accelerated to 11.8% from 4.7%.
- Owner-occupier commitments increased at their fastest pace in a single month since March 2009 rising by 10.7% to $14.333bn, which followed a 5.8% lift in June. Growth through the year rose to 18.5% from 8.9%.
- Refinancing commitments to owner-occupiers slowed by a similar magnitude (-11.8%) as the month before (-11.5%), though the level is still elevated at $7.843bn (46.2%yr), indicating that borrowers remain active in taking advantage of more competitive offers in the market.
- Commitments to the investor segment have lagged in the reopening, though they still increased by another 3.5% in July to $4.584bn after an 8.3% rise in the month prior. The pace of growth over the year remains negative at -5.1% from -5.8% in June.
Housing Finance — July | The details
The easing of restrictions from mid-May in most states helped activity to get going again in the residential housing market and this was reflected in these data for June. This has then carried over into July led the owner-occupier segment, alongside an understandably more muted recovery from investors amid uncertainty over the outlook for housing demand associated with the border restrictions and rent deferrals.
Approvals made to the owner-occupier segment to purchase established homes have increased sharply since the national shutdown ended posting back-to-back rises of more than 10% over the past two months, with the level now slightly above where it was when the pandemic emerged (green line in the chart below). Construction-related approvals have also rebounded, lifting by 4.0% in July after a 1.9% rise in the month prior.
The easing of restrictions from mid-May in most states helped activity to get going again in the residential housing market and this was reflected in these data for June. This has then carried over into July led the owner-occupier segment, alongside an understandably more muted recovery from investors amid uncertainty over the outlook for housing demand associated with the border restrictions and rent deferrals.
Approvals made to the owner-occupier segment to purchase established homes have increased sharply since the national shutdown ended posting back-to-back rises of more than 10% over the past two months, with the level now slightly above where it was when the pandemic emerged (green line in the chart below). Construction-related approvals have also rebounded, lifting by 4.0% in July after a 1.9% rise in the month prior.
A key contributor to the recovery in the owner-occupier segment has been from first home buyers, with both approvals and commitments having lifted sharply off the low point in May.
The state detail is provided in the table, below. This highlights the outperformance from the owner-occupier segment.
The pick-up in the value of owner-occupier commitments since the reopening has been sharp in NSW (23%), QLD (33%), SA (22%), WA (35%) and TAS (21%), though Victoria has been flat (0.1%).
It has been a similar story in the investor segment over the past two months, with gains in NSW (18%), QLD (20%), SA (12%), WA (32%) and TAS (27%), while Victoria has declined by 0.8% over the period.
Housing Finance — July | Insights
The rebound in housing market activity continued into July from the mid-May easing of restrictions in most states. Victoria has clearly lagged behind and greater weakness will be evident from next month to reflect the impact of restrictions being brought back to contain the virus outbreak there. The owner-occupier segment is leading in the recovery with activity from first home buyers coming back strongly.