Finance Finance News Housing loans show strength with bounce in October

Housing loans show strength with bounce in October

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The housing market is providing some welcome strength in a softening economy with the number of home loans approved up 0.3 per cent in October after falls of 0.4 per cent in September and 1.1 per cent for August according to official figures.

National Australia Bank senior economist David de Garis said the Australian housing market continues to be driven by Sydney.

“The other states have been much flatter and if anything the Melbourne market has come off the boil a little bit,” he said.

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The value of total housing finance rose 1.0 per cent in October, seasonally adjusted, with loans approved for owner-occupied housing, and approvals for investment housing both up 1.0 per cent.

Mr de Garis said investor housing has stayed at elevated levels through the year  while the owner-occupier market has stayed subdued.

The number of loans for the construction of new homes was up 1.5 per cent in October, which Mr de Garis said should slow house price growth in time.

“We know there is a lot of new apartments coming on to the market in the next one to two years, that should at least be some type of headwind to house price growth in that market,” he said.

JP Morgan economist Ben Jarman said loans to owner-occupiers are down slightly for the year, while growth in loans for housing investors he believes are too strong.

New lending reforms by the Australian Prudential Regulation Authority should have an impact on lending patterns in the new year, he said.

APRA will crack down on lending growth to investors of more than 10 per cent, and place closer scrutiny on risky lending practices.

They can add up to something that is going to exacerbate a slowdown that we think was going to happen for housing,” Mr Jarman said.

“As we saw in New Zealand, the impact when you bring these things in tend to be front-loaded, because banks are quite conservative in following the rules.”

“So we should see fairly immediate implications from that.”


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