Australia mortgages point to 'mini-boom' in housing but signs bleak elsewhere in economy

Australia mortgages point to 'mini-boom' in housing but signs bleak elsewhere in economy

Reuters ?|?Oct 09, 2019 11:31PM ET

Australia mortgages point to 'mini-boom' in housing but signs bleak elsewhere in economy

By Swati Pandey

SYDNEY (Reuters) - Approvals for new home loans in Australia jumped again in August with lending to investors rising the most in three years, in yet another sign that recent rate cuts and easing of lending rules was boosting activity in the housing market.

Home loans, a leading indicator for housing prices, showed a solid 3.2% gain in August to A$33.5 billion ($22.60 billion), Thursday's data from the Australian Bureau of Statistics (ABS) showed.

Lending to property investors increased 6%, the largest increase since September 2016.

The figures will likely provide some support to housing prices and in turn consumer confidence, which hit a four-year low this month. Australia's housing stock is valued at A$6.8 trillion ($4.83 trillion), or almost four times the country's annual gross domestic product.

"This reinforces our view of a mini-boom for loans towards 20% y/y and prices nearing 10% y/y," said UBS economist George Tharenou

"If loans and prices surprisingly continued to boom, it would...raise the risk it stops the RBA from easing next year," added Tharenou, who expects further rate cuts by mid-2020.

The Reserve Bank of Australia (RBA) reduced its benchmark rate to a record low of 0.75% last week following two back-to-back easings in June and July to revive economic growth, employment and inflation. It has signaled to do more if needed.

RBA's aggressive cuts have helped revive home prices across Australia's capital cities since the middle of this year, although on a year-on-year basis they are still in negative territory.

Economic activity outside of housing is still subdued, however, with tepid wage growth and rising unemployment weighing on consumer spending.

Thursday's data showed personal finance commitments fell 2.2% in August followed by a 3.8% drop in July. Lending to businesses, which includes commercial as well as lease finance, slipped 2.1% to be down more than 6% from a year ago.

And despite the gains in home prices recently, many market players and analysts still have misgivings about a strong revival in the housing market.

A CoreLogic research released on Thursday showed the number of new real estate listings across Australia's capital cities over the past 28 days tracked at the lowest level for this time of the year since 2007.

"Despite rising home values in some cities and a lift in buyer numbers, the seasonal ramp up in fresh real estate listings has been mild relative to prior years," CoreLogic's head of research Tim Lawless wrote.

Lawless cited high transaction costs and dour consumer confidence among reasons.

"Historically, the seasonal peak in new listing numbers is around the second week of November, so there is still some time for the spring/early summer listing season to ramp up."

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media?would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not?necessarily?provided by any market or exchange, but may be provided by?market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes.?Fusion Media?and?any provider of the data contained in this website?will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (UK) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Espa?ol (Espa?a) Espa?ol (México) Fran?ais Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türk?e ????????? Ελληνικ? Svenska Suomi ????? 日本语 ??? 365国际平台官网 香港 Bahasa Indonesia Bahasa Melayu ??? Ti?ng Vi?t ?????
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+