Australian housing finance commitments lifted against expectations rising by 1.7% in May, rebounding from a holiday-related fall in April. Gains were broad based in the month, though commitments to the owner-occupier segment are down by almost 10% over the year while the investor segment is up by around 24%.
Housing Finance — May | By the numbers
- Housing finance commitments (ex-refinancing) advanced by 1.7% (vs -2.5% expected) to $32.4bn, though annual growth slipped to -0.4% from 2.6%. Commitments in April were revised from -6.4% to -2.8%.
- Owner-occupier commitments rebounded from April's 1.7% fall to post a 2.1% month-on-month rise to $21.2bn (-9.7%yr).
- Investor commitments lifted by 0.9% in the month to $11.2bn (23.7%yr), steadying from April's 4.8% fall.
- Total refinancing increased by 3.1%m/m to $17.1bn (16.6%yr) to sit just below its record high.
Housing Finance — May | The details
Housing finance commitments have essentially tracked sideways at elevated levels over recent months, alternating between rises and declines of similar magnitudes. May's commitments came in at $32.4bn, around 2.5% off the record high reached at the turn of the year. Both major segments saw increases in the month, with owner-occupier commitments up by 2.1% and investor commitments lifting by 0.9%.
In the owner-occupier segment, the strongest gains came through in the construction-related (8.7%m/m) and alterations (11.6%m/m) categories; these gains are likely boosted by the rises in materials and labour costs amid the supply shortages in the construction sector. Commitments to upgraders lifted modestly (0.3%), while the rise seen in the first home buyer category (3.4%) reversed the decline in April.
Investor commitments fell for the first time in 10 months in April before picking up again in May (0.9%m/m). Commitments to the segment have run at a clip north of $11bn/mth for 5 consecutive months.
The state details are summarised in the table below. The main theme remains the divergence between the owner-occupier and investor segments; the former has declined in each state over the year, with first home buyers a major contributor, as the latter has advanced.
Housing Finance — May | Insights
May's 1.7% rise in housing finance commitments came after a 2.8% falling April, a decline the ABS noted was accentuated by the high number of public holidays in the month. The fundamentals point to a rolling over in commitments through the remainder of the year with the RBA's rate hiking cycle now well underway and house prices turning lower; data from CoreLogic reported national housing prices declined for the second month running in June (-0.6%) led by the Sydney and Melbourne markets.