First home buyers switch off, investor activity moderates
“Disappointing” is how the Real Estate Institute of Australia describes the latest housing finance figures from the Australian Bureau of Statistics. REIA CEO Amanda Lynch says that the biggest concern is the lack of activity from first-home buyers even though there has been a revision of how figures are calculated: “The figures shows first home buyer levels stand at 14.5 percent for December. While the revisions have increased the proportion of first home buyers by around two percentage points, the figure is the lowest since May 2004 and shows a steady decline since May 2012.”
The December figures, in trend terms, show an increase in owner-occupier finance commitments of 0.5 per cent, the same as November, but with refinancing removed the increase is just 0.1 per cent. Increases were recorded in all states except Tasmania, the Northern Territory and Queensland with the highest increases in the ACT, which recorded a rise of 1.1 percent. The largest decrease was in Tasmania of 2.1 percent and Queensland was flat.
Amanda Lynch concludes that the RBA’s rate cut this month was the right decision for the housing market: “The December 2014 lending figures indicate a moderating market. With moderating housing lending and GDP growth below trend, inflation well within the RBA’s decision to cut interest rates at its February meeting was appropriate.”
Housing finance figures good news for construction
The Housing Industry Association says that new figures from the Australian Bureau of Statistics mean good news for the house building sector. Home loans to owner-occupiers for the construction of new dwellings was 0.8 per cent higher in December from the month before, 1.1 per cent higher in the December quarter than in the previous 3 months, and 9.8 per cent higher than the last quarter of 2013. Buyers of newly built homes declined though, by 1.8 per cent in December and by 4 per cent over the last quarter of 2014. Investors continue to be a driving force in the housing market with a surge of 44.2 per cent in lending to investors in December and a quarterly rise of 16 per cent in value. HIA economist Diwa Hopkins commented: “Housing construction loans, in the owner occupier and investor segments of the market, finished 2014 on a strong note. This provides a very positive signal for activity in the residential construction sector in 2015.”
Analyst predicts interest rates of below 2 per cent, house prices to rise
Charlie Aitken, an analyst with Bell Potter, has revised his predictions for the Australian economy as a result of the changing global tide. Aitken says that he now expects the Australian dollar to fall to 68 US cents (down from his previous outlook of 75 cents) and that the Reserve Bank of Australia will cut interest rates to below 2 per cent over the next 12-18 months. Aitken has also upgraded his outlook for the real estate market, predicting that median house prices will grow by 10 per cent, twice as much as he’d previously expected.
Source: Sydney Morning Herald
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