The reopening in the state of Victoria helped drive Australian housing finance commitments to a new record high level in November as policy stimulus measures continue to boost activity, notably in the first home buyer segment.
Housing Finance — November | By the numbers- Housing finance commitments (in $ value terms, ex-refinancing) lifted for a 6th consecutive month with a much stronger than expected rise of 5.6% coming through in November to $23.96bn (exp 1.2%, prior 0.7%). The annual pace inched up to 23.7% from 23.3%.
- Owner-occupier commitments advanced by 5.5%m/m to $18.34bn to be up 31.4% over the year (prior: 0.8%mth, 31.2%yr).
- Refinancing to the owner-occupier segment pulled back sharply in the month (-15.9%), with the level at $6.22bn up 1.2% on a year earlier.
- Investor commitments increased by 6.0% in November to $5.61bn (prior: 0.3%) as the annual pace lifted to 3.9% from 2.8%.
Housing Finance — November | The details
The value of Australian housing finance commitments rose at an accelerated pace in November (5.6%) relative to the median estimate (1.2%) as activity in Victoria resumed on the state's reopening from its lockdown, enabling the effect of policy stimulus from low rates and the Federal Government's HomeBuilder scheme to gain hold, together with existing incentives for first home buyers. Commitments to the owner-occupier segment nationally are 31.4% higher than a year earlier reflecting the effects of the range of policy stimulus in the system compared to a more subdued investor segment (3.9%yr), with elevated capital city vacancy rates following the closure of the international border a headwind in that market.
A key factor driving the upswing from owner-occupiers has been the surge in activity from first home buyers, with most states making incentives to the segment more generous as a stimulus response to the pandemic. The level of first home buyer commitments were up by 46.7% over the year in November at $5.7bn, while the number of approvals had risen at a similar pace (47.6%) to 13,905.
The effect of state government first home buyer incentives can be seen in the next chart, with the sharpest rises occurring in Western Australia (101%yr) and Queensland (78%yr).
Staying with the state by state theme, owner-occupier commitments are shown in the chart below, with the effect of Victoria's lockdown evident through its stop-start recovery.
Activity in the investor segment was coming from a low base and the pick up that has since occurred has been more modest than in the owner-occupier segment. Again, Victoria is lagging in that broader turnaround.
On the owner-occupier approvals numbers, the standout has been in the construction-related area to either fund the construction of a new build or to purchase a newly completed home. Approvals of this type jumped another 6.0% in November to be up by 65.5% over the year, which reflects the effect of the HomeBuilder scheme. This is particularly evident in approvals for new construction which have soared by 99% over the period.
Housing Finance — November | Insights
Victoria's reopening ensured it was another strong outcome for housing finance commitments and approvals in the month of November. The range of policy stimulus measures have had a profound effect on the housing market and this is, for the time being at least, outweighing more medium to longer-term headwinds associated with low population growth and elevated spare capacity in the labour market. Property prices have turned higher after a period of decline in the middle of last year and appear poised to rise further in the months ahead.
