Australian housing finance commitments have increased for the first time in more than a year rising by 4.9% in March. This comes alongside gains in housing prices in recent months, signs that conditions in the housing market are stabilising even as the RBA continues to hike rates. Fast population growth post the pandemic and tight supply look to be the key factors.
Housing Finance — March | By the numbers
- Housing finance commitments (ex-refinancing) increased by 4.9% In March - a significant upside result on the consensus estimate (-0.3%) - to $24bn, down 26.3% over the year.
- Owner-occupier commitments lifted by 5.5% to $15.9bn (-24.8%yr), seeing their first rise in 10 months.
- Investor commitments posted a 3.7% rise to $8bn (-29.2%) after falling for 13 months in succession.
- Refinancing continues to surge; a 6.5% rise in March took the level to a new record high at $21.2bn, up 28.5% from 12 months earlier.
Housing Finance — March | The details
A 4.9% rise in housing finance commitments in March stemmed 13 consecutive months of declines. Over that period, commitments fell by a third from their January-22 peak of $34.1bn to $22.8bn in February-23.
Owner-occupier commitments lifted 5.5% in March and investor commitments were up by 3.7%, the first instance of both major segments rising since January last year. Over the March quarter, total commitments contracted by 5%, with the owner-occupier segment (-4.8%) accounting for around two-thirds of that decline as the investor segment (-5.3%) also weighed.
The increase in the value of owner-occupier commitments in March was backed up by an increase in loan volumes. This was led by upgraders (7%) and first home buyers (15.8%), with the latter rebounding to a 5-month high. Construction-related loans stabilised (0.2%) but are sitting only marginally off record lows, with rising interest rates, cost increases and solvency concerns in the home building sector impacting sentiment.
Refinancing lifted through $21bn in March to reset to a new record high. The backdrop of an aggressive RBA rate hiking cycle has seen refinancing rising by almost 30% on a year ago. Refinancing to owner-occupiers topped $14bn for the first time in March, while investor refinancing is also at a record high.
Housing Finance — March | Insights
Conditions in housing markets across the country are showing signs of stabilising. Housing prices across the capital cities started to rise in March, coming alongside the rise in finance commitments. According to CoreLogic, capital city housing prices slid by around 10% from their recent peak in April-22, following an earlier rise of more than 20% through the Covid period.