Value of Australia’s housing finance commitments rebounds strongly in September

The value of Australia’s housing finance commitments rebounded in September, surpassing market expectations. The value of housing finance commitments rose 1.8 percent sequentially, as opposed to market projections of a decline of 1.6 percent. The solid rebound was driven by a strong rise of 4.6 percent in investor finance.

On a year-on-year basis, the value of housing finance commitments dropped 1 percent in September, stronger than the decline of 7 percent year-on-year seen in August. The September’s annual rate is the strongest since February 2016. The number of housing finance commitments increased 1.6 percent sequentially.

The strong rise of 4.6 percent sequentially in investor finance lifted the annual growth to 9.6 percent year-on-year, the first positive year-on-year gain since July 2015, noted ANZ in a research note. The value of owner-occupied finance excluding refinancing dropped 0.8 percent sequentially in September, as compared with the upwardly revised growth of 0.3 percent month-on-month in August. First home buyers’ finance increased 0.9 percent sequentially, whereas for upgraders it dropped 1.1 percent.

In terms of trend, housing finance, excluding refinancing, was up 0.4 percent, with the annual rate rising to 2.2 percent year-on-year in September from August’s decline of 0.4 percent. The rebounding trend is in line with other data flow on the housing market. Prices of house on the eastern seaboard have continued to increase, building approvals are close to record levels and auction clearance rates continue to be elevated, said ANZ.

The housing finance value for the new housing construction remains weak and in line with tighter surveyed lending conditions for developers. This implies that building approvals might be close to peaking, according to ANZ.