The Australian housing market continues to give mixed signals. New housing permits in the country grew 3% in April. The annual expansion is positive for the first time since October 2015. Housing permits in New South Wakes reached the second-highest level on record last month, primarily driving the overall strength. Also, growth in Queensland and Victoria has helped contribute to the overall strength. Australia’s building permits are trending higher again, said ANZ in a research report.
This poses risk on the upside to the view that housing construction will ease in 2016. But, several factors imply that the latest strength in approvals is not expected to go higher. Banks in Australia are quite careful of lending to foreign investors. Moreover, banks have tightened the lending criteria to developers on worries of emerging pockets of oversupply in certain areas.
On the contrary, growth in housing credit decelerated to the lowest rate since September 2013. This indicates weakness in investor credit growth. Investor credit annual growth decelerated sharply from June 2015’s peak of 11% after the macro prudential investor lending regulation came in. But owner-occupied credit growth accelerated in April, rising 7.3% y/y.
