Australia’s housing finance grows in October, housing construction likely to fall in 2017

Australia’s housing finance was up again in October, mainly due to additional growth in investor borrowing. The total value of housing finance commitments was up in October, rising 0.6 percent month-on-month, following an upwardly revised 2.3 percent sequential rise in September. Annual growth in commitments is at present in positive territory for the first time since November 2015.

The monthly rise was driven by the investor segment again. Annual growth of 12 percent year-on-year shows a sharp turnaround from the double-digit falls recorded through the first half of 2016, indicative of rebounding sentiment in the housing market. Recent developments in house prices and auction results have also been strong, implying that the housing market is finishing 2016 on a positive note, noted ANZ in a research report.

But the investor enthusiasm for housing has not extended to new dwellings. Investor finance for the construction of new homes has been trending lower for six months, and in October it dropped to the lowest level in more than two years. This fall, along with the recent decline in building approvals, underpin the view that the housing construction is close to peaking and would see investment decline  through 2017, added ANZ.