Not much to cheer in Australian housing industry
CANBERRA - Australia's housing industry outlook remained gloomy with data for March showing that while the number of loans to home buyers and construction of new dwellings rose marginally, the value of lending to the sector is continuing to drop.
Housing finance data released by the Australian Bureau of Statistics (ABS) on Monday showed that the number of loans approved to home buyers in March rose by an insignificant 0.3 per cent, after seasonal adjustment.
The trend estimate for the total value of dwelling finance commitments excluding alterations and additions fell 0.2 per cent. Owner occupied housing commitments fell 0.5 per cent, while investment housing commitments rose 0.4 per cent. In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions fell 0.5 per cent.
Overall, the value of housing loans - including loans to both investors and home buyers - fell by 0.5 per cent in total and by 1.0 per cent excluding refinancing transactions - the third consecutive fall by both measures.
In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 16.4 per cent in March 2012 from 17.2 per cent in February 2012. In seasonally adjusted terms, the number of commitments for owner occupied housing finance rose 0.3 per cent.
The measure of housing finance approvals was down by 0.2 per cent in the month, though for the whole year it is up by 4.6 per cent.
But the trend has clearly flattened - in the most recent six months, the rise on the trend measure was less than 1.0 per cent.
The figures also suggest the recent mild deflation in housing prices is still under way.
Aside from refinancing deals, the average loan size in March was $306,400, compared with a peak of $328,500 in April 2011, a fall of 6.7 per cent.
That's consistent with the latest ABS index of established house prices, which fell by 4.5 per cent over the year to the March quarter.
In trend terms, the number of commitments for owner occupied housing finance fell 0.4 per cent, while the number of commitments for the purchase of new dwellings fell 1.3 per cent and for the purchase of established dwellings fell 0.6 per cent, while the number of commitments for the construction of dwellings rose 1.1 per cent.
This stagnation in demand for housing is not news.
However it does underscore the lack of inflationary risk in the interest rate cut by the Reserve Bank of Australia two weeks ago, as well as the scope for further nudging down the cash rate if the situation warrants.
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