Australia’s housing finance grows strongly in November on solid rise in investment segment

Australia’s housing finance recorded additional strong growth in November, boosted again by the investor segment. Housing finance rose 3.2 percent on sequential terms and 7.4 percent year-on-year seasonally adjusted in November. The strong rise in figure was driven by the investor segment that grew 4.9 percent sequentially. On a year-on-year basis, investor lending grew 21 percent, the most rapid pace of growth since the first half of 2015.

The rebound in investor activity shows ongoing strength in auction results and price growth. House prices were up 5.1 percent in Sydney and 5.9 percent in Melbourne in the final three months of 2016. On a year-on-year basis, the price grew 17 percent and 15 percent in Sydney and Melbourne respectively. This resurgence implies that sentiment in the housing market continues to be strong and is expected to continue in 2017, noted ANZ in a research report.

However, for the first home buyers, the solid price growth in recent months is not such an encouraging story. Constrained by rises in prices, weak wages growth, and low interest rates impacting t he return on savings, the figure of first home buyers per month has actually dropped a bit in the past year.

As a share of total housing finance commitments, first home buyers dropped to a record low of just 8.7 percent in November, a trend that appears unlikely to unwind in the near term, according to ANZ. Owner occupier segment rose 1.6 percent sequentially in November, whereas it dropped 3.6 percent on a year-on-year basis.

At 05:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was bullish at 99.6535, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -121.351. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex