The value of Australian housing finance fell by 1.2% in July ($24.2bn), driven by a 1.9% month-on-month decline in lending to owner-occupiers, the investor segment broadly flat (-0.1%m/m). The backdrop of the RBA's rate hiking cycle saw commitments fall 33.1% from the peak in January 2022 to the trough in February 2023; however, commitments are subsequently up 5.8% to July, with housing prices up around 5% nationwide to August, as rapid population growth has brought supply-demand dynamics to the forefront of the price cycle. Refinancing elevated to a new cycle peak ($21.5bn), up 5.4%m/m.
Note: The ABS has temporarily suspended the first home buyer components from the series.
July's 1.2% decline was steeper than markets anticipated (-0.5%) and came on the back of a 1.6% fall in June. Data from CoreLogic this morning reported national housing prices are now up 4.9% from their floor in February, with this upturn driving commitments up by 5.8%, despite the falls of the past couple of months.
Owner-occupier lending was 1.9% lower in July, with weakness evident across the various loan types. Home building sentiment is weak, with this reflected in the value of construction-related lending falling by 4%m/m ($2.4bn) as loan volumes plunged by 9.7% (3,950) to be in line with their previous low in 2008. Lending to upgraders softened by 0.4%m/m ($12.1bn), a fall of 14.5% over the past year, with loan volumes down 11%yr.
Lending to the investor segment eased 0.1% in July ($8.6bn), but commitments are up 11.6% from the February low. Queensland has been the major driver, with investor lending surging 31% since February.
Total refinancing lifted 5.4% on the back of rises in both major segments: owner-occupiers 4.9% and investors 6.5%. This elevated refinancing to a new record high at $21.5bn, up 21% since the start of the RBA's rate hiking cycle in May 2022.
