Australian borrower-accepted housing finance commitments firmed by 0.7% in October rising to a record high level at $22.68bn with policy support measures driving a strong rebound in activity over recent months.
- Housing finance commitments ($ value, ex-refinancing) made it 5 straight monthly gains rising by 0.7% in October to $22.68bn, though this was short of the median estimate for a 2.5% lift (prior: 5.9%). In annual terms, growth came back a touch to 23.3% from 25.5%.
- Owner-occupier commitments advanced by a further 0.8% to $17.39bn to be up 31.2% on a year earlier (prior: 6.0%m/m, 33.8%Y/Y).
- Refinancing to owner-occupiers pulled back by 6.9% to $7.4bn for an annual rise of 23.8%.
- Investor commitments ticked up by 0.3% in October to $5.29bn (prior 5.2%), with the annual pace slowing from 4.2% to 2.8%.
Housing Finance — October | The details
The value of Australian borrower-accepted housing finance commitments has now lifted in each of the past 5 months, the period coinciding with the reopening of the economy. But October's 0.7% gain was by a distance the softest outcome during this stretch, due largely to weakness in Victoria associated with the state's return to lockdown. Notwithstanding this, the main narrative is that housing finance commitments nationally have accelerated by 38.9% since May on the back of a range of policy support measures, including very low interest rates, the Federal Government's HomeBuilder scheme, and state government incentives for first home buyers.
In the owner-segment, the value of commitments (ex-refinancing) was up by 0.8% in October to $17.39bn for a gain of 31.2% over the year. Most notable were the gains that came through for alterations (up 21.8% to $270m) and new construction (lifting 10.9% to $2.85bn), both reflecting the traction from the HomeBuilder scheme. Meanwhile, the strength in the first home buyer segment extended to a 5th straight month, though at a more moderate pace (3.1%) on this occasion. Still, the value of first home buyer commitments has risen almost 49% from a year ago. Commitments to the investor segment lifted marginally in October (0.3%) to $5.29bn for a gain of 2.8% over the year. There has been a decent rebound in the segment since the reopening (29.5%), though it has not been as strong as it has been for owner-occupiers (42%) and this is also off a very weak base.
In terms of owner-occupier approvals, the main point of strength in October was around loans for new construction — again pointing to the HomeBuilder effect — which lifted by 11.5% to be up almost 83% over the year. Also, first home buyer approvals advanced by 3.4%, taking the annual gain to 48.1% from 45.5%, with state government incentives a key factor driving the escalation.
A summary of the state data can be seen in the table below. Very clearly, the weakness in Victoria stands out due to the disruption from the shutdown, though given the stimulus measures in the market a strong rebound should be coming now that the state has reopened, all else equal.
Housing Finance — October | Insights
The picture in October was skewed due to the shutdown in Victoria, but the main takeaway is that the mix of policy measures that have been introduced to support the housing market are having a powerful effect, particularly in the construction-related areas and in the first home buyer segment.
