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LOAN DEMAND TO SLOW AS HOME PRICES COOL
Demand for mortgages is expected to slow as Australia’s housing price boom comes off the boil.
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House prices – as measured by rising on variable rate loans.
At its quarterly meeting in December, the Council of Financial Regulators thought it was too early to assess the impact of raising the serviceability buff er to three percentage points above the loan product rate being applied, from 2.5 percentage points previously.
CoreLogic – rose by just one per cent in December, the slowest pace in almost a year, although over 2021 they were still up more than 20 per cent nationally.
Aff ordability constraints and rising fixed mortgage interest rates are seen as reasons for this slowdown.
In October the banking regulator also tightened rules when applying for a loan, to ensure prospective home buyers can pay the mortgage when interest rates inevitably start In January, the Australian Bureau of Statistics released its monthly building approvals data for detached and multi-units covering all states and territories.
Housing Industry Australia’s (HIA) chief economist Tim Reardon says approvals for detached homes in November 2021 were the strongest since February 2000, excluding the HomeBuilder surge in 2020/21. Detached approvals remain elevated in all jurisdictions.
“This boom in detached home building is set to be sustained well into 2023.
However, they continue to keep a watchful eye on developments in housing market more broadly.
Economists at AMP Capital expect loans for housing to have risen two per cent in November.
In October, housing loan demand from investors neared the record high set in April 2015 aft er rising for 12 consecutive months.
In contrast, loans for first-time buyers fell for a ninth month in a row and were 16 per cent lower for the year. -AAP
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“Multi-unit approvals have been recovering from the adverse impact of COVID-19 and continued to increase in November with a 7.5 per cent increase in the month. This leaves multi-unit approvals for the three months to November also 7.5 per cent higher than for the same period the previous year,” Mr Reardon says.
“This is an encouraging sign that apartment construction will return prior to the return of overseas migration.
“The value of renovations approved also remains elevated. The last 12 months has seen the value of renovations approved increase by 35.7 per cent on the previous year. All indications continue to demonstrate that demand for building services and materials will remain elevated in all regions throughout 2022 and well into 2023.”
BY THE NUMBERS
In seasonally adjusted terms, total residential building approvals increased in November 2021 compared to the previous month in most states. Tasmania led the pack (+40.8 per cent), Queensland (+20.0 per cent), followed by South Australia (+14.5 per cent) and Victoria (+8.9 per cent). New South Wales had the largest decline (-18.4 per cent) reflecting volatility in the multi-unit approvals, Western Australia also declined marginally (-1.1 per cent). In original terms, building approvals increased in the Australian Capital Territory (+18.9 per cent) and the Northern Territory (86.4 per cent).
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