Australian housing finance commitments lifted by 2.2% in August, largely reversing declines over the prior two months. Commitments in August ($24.8bn) were 8.6% above the cycle low in February, responding to an upturn in housing prices - despite higher interest rates - as strong post-pandemic population increase has run up against tight supply.
The ABS has currently suspended its first home buyer series.
The 2.2% lift in commitments in August broadly reversed the declines posted in June (-1.4%) and July (1.1%). Both the owner-occupier (2.6%) and investor segments (1.6%) contributed to the rebound. At $24.8bn, commitments have risen by 8.6% from the floor in February, with housing prices according to CoreLogic up 6.6% nationwide to September from their trough in January.
Aside from rising housing prices, increased loan volumes have also driven the rebound in commitments. In the owner-occupier segment, loan approvals to upgraders lifted by 1.8%m/m to be 10.6% above February's low; construction-related approvals increased by 6.7% but remain near 15-year lows.
Investor commitments have seen a sustained rise from their low in February, increasing by 13.4% over the period to August. Very low vacancy rates and rising rents have clearly been supportive factors for investors. The ABS does not publish loan volume estimates for the investor segment.
Refinancing saw a 3.9% decline in August; however, at $20.6bn refinancing activity remains very elevated as RBA rate hikes continue to flow through and fixed-rate mortgages roll over to higher variable rates. Around $14bn of refinancing activity to owner-occupiers was completed in August, with $6.6bn for investors going through.
