Growth in lending for housing took a hit in December but economists believe the sector will be a major driver for the economy in 2014.
The number of home loans approved in December fell 1.9 per cent, seasonally adjusted figures show, which was worse than the 0.9 per cent rise economists had expected.
The value of total housing finance rose 0.2 per cent in December, seasonally adjusted, to $27.05 billion, the Australian Bureau of Statistics said.
CommSec economist Savanth Sebastian said the fall in the number of housing commitments in December was consolidation after a year of solid gains.
“The value of housing finance was up about 15 per cent on a year ago,” he said.
“It really does suggest that the housing sector is the shining light of the Australian economy.”
Mr Sebastian said he was encouraged by the 0.4 per cent lift in the number of new loans approved to build new homes.
“That’s the key area to look at, it suggests that construction activity will be the big driver of the Australian growth story this year,” he said.
“Not only does it drive economic activity but it also puts a lid on property price gains, at a time when the Reserve Bank of Australia is hesitant to raise the cash rate because of the weak labour market.
“So more supply coming on board will curb the significant price gains over the past 12 months.”
Australian capital city home prices rose 3.4 per cent in the December quarter, and were up 9.3 per cent in 2013, The ABS said on Tuesday.
The gain in house prices was broad-based, with all state capitals posting solid gains, JP Morgan economist Tom Kennedy said.
“The housing market did turn the corner in 2013 and these gains are not just located in the big property markets of Sydney and Melbourne,” he said.
However, it seemed first home buyers were being priced out of the market, Mr Kennedy said.
Owner occupiers were not well represented in the figures either, he said.
The value of home loans approved for investment properties rose 2.9 per cent in December, while loans for owner occupiers fell 1.5 per cent.
“First home buyers continue to be forced on the sidelines and the real winner are the investor component of the housing market,” he said.