Building approvals fall to thirteen-month lowFurther evidence that the new home building cycle may have reached a ceiling is provided by the latest building approvals data from the ABS, according to the Housing Industry Association. Total dwelling approvals declined by 11.0 per cent in seasonally-adjusted terms during September, to reach a thirteen-month low of just over 15,000. Detached house approvals eased back by 3.0 per cent during the month, but remained 7.9 per cent higher than twelve months earlier. Multi-unit dwelling activity was particularly weak during the month, with a 21.5 per cent reduction occurring compared with the previous month and activity down by 34.2 per cent compared with the same period of 2013. “The figures provide further evidence that the national recovery in new home building is likely to have passed its peak,” noted HIA Senior Economist, Shane Garrett., “Unfortunately, we are again moving in the wrong direction in terms of new housing volumes. We need a more imaginative approach from policymakers, particularly around land supply and the delivery of housing infrastructure.”
Lenders remain upbeat on housing market
With the Reserve Bank of Australia predicted to hold interest rates at their current 2.5 per cent some home loan lenders are remaining positive despite a slowdown in growth for both building and prices. Although there are potential regulatory interventions to slow the housing market mortgage firms such as Westpac are optimistic that lending growth will continue. Chief executive Gail Kelly has told the Sydney Morning Herald that she expects to see the 7 per cent rate of credit growth seen this year to continue into 2015.
Price rises almost entirely down to two cities
Prices are on the rise again in Australia but the growth is almost entirely down to Sydney and Melbourne. The latest RP Data figures also showed a small increase in Brisbane but there have been drops in Hobart, Canberra, Adelaide and Perth. Overall, prices were up 1 per cent last month.
More Aussies choosing interest only mortgages
Credit agency Moody’s has expressed concern at a growing number of Australians choosing interest only loans at a time when prices are high. Loan repayments on interest only loans are particularly low due to interest rates but Moody’s warns that when rates increase those borrowers may get caught out with higher payments. For some though an interest-only loan will be the best option and a good mortgage broker will be able to advise you based on your individual circumstances.