Yesterday’s finance figures from the ABS show that established homeowners and investors are active in the market, but not surprisingly, first home owner loan approvals are falling.
And despite the cost difference between fixed and variable interest rates dropping, June saw a higher percentage of Australians turning their backs on locking in their home loan rate.
According to the latest loan approval data from Mortgage Choice only 2.6% of new borrowers chose a fixed interest rate for their home loan. This compared to 3.3% in May and 1.8% in April.
The number of housing finance approvals for owner occupiers rose in May by 1.9% after having fallen in every month bar once since last July, including a 1.5% fall in April.
Investment lending in total rose 2.6% in May after a 0.8% gain in April to be up 17.3%
in dollar terms over the year to May, presumably a good part of that prices
and some underlying volume growth too.
There is no doubt that the loan markets have softened, and this is a forward indicator for what will happen to property over the next few months.
Over the 3 months to May 2010 total housing loans dropped by 26.2 per cent compared to the same period in 2009. First home buyer loans were down by 56 per cent, while trade up buyer loans fell by 10 per cent.
“Today’s result also points to the recent substantial declines in housing affordability, which is not just a product of interest rate increases, but upward price pressures sourced from tight credit availability, and obstacles related to land supply, planning, infrastructure charges and taxation,” said Graham Wolfe, chief executive of the HIA
“Impediments to a sustained housing recovery must be removed if we are to have any chance of supplying sufficient new housing to meet demand,” said Mr Wolfe. “HIA estimates that the underlying demand for housing in 2010 is running at 190,000 dwellings per year. Yet, housing starts in 2010 are forecast to total only 165,940. This should be a signal to the Reserve Bank that steady rates are the appropriate course for the remainder of 2010.”
The bottom line is that the double digit rise in property price growth is over, and house price growth in our capital cities is likely to be more subdued for the rest of the year.
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