Australian Housing Finance (Feb10) – house prices up, loan volumes down
Posted on 12 April 2010
ABS Housing Finance for Feb10 was released today (here). While the newspapers have been bleating about record house prices and clearance rates, lending volumes continue to slow.
The number of housing loans to both first home buyers and the rest of us is now well off the peak. Non First Home Buyers borrowing by number peaked way back in mid-2007 before the winds of change had swept in. First Home Buyers have now ‘normalised’ post the expiring of the cash handouts. Even the average loan size appears to have rolled over dropping from its December peak of $283,000 to $274,400 (on a trend basis).
This data set suggests that the combination of the ending of the FHOG transfusion, consecutive interest rate rises and some negative talkback from the RBA governor seems to be making an impact.
5 responses to Australian Housing Finance (Feb10) – house prices up, loan volumes down
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Not a bad outcome really. If house prices are falling but defaults remain low (as I gather they are?), that is probably a nice way to take the steam out of the market.
I think we can all agree that house prices are too high and need to come down, but I would much rather see a slow slide as a result of unwillingess of buyers to take on huge debt, rather than a total collapse as we saw in the US (which I know is unlikely for a number of reasons).
Still if even the RBA are worried about high prices, and more particularly the debt that accompanies them, then we should too.
Guess the greatest single threat is to the assumption that ‘incomes will rise faster than interest rates’. What’s the probability of another external shock – commodity demand from China drying up or credit squeeze part 2? Or the probability of substantially higher interest rates – snuffling housing construction demand and driving down consumption and the economy?
Both are real risks – but seem unlikely in the absolute near term. I’m all for a muddle through if we can get one – or, at worst, an early 90′s scenario…
I think that people don’t want to take any risk during this period. The economy now seems to be on a good stage, I mean at raising stage. The money flow will slowly increase and the normal mentality will come soon. I think this is the time to take a risk and invest.
Thanks. Guess we are on opposite sides of the fire. Risk appetite for me is at or near a peak. Money supply is being supported by governments and constrained by banks. And asset prices have had a very good run. I’ve reduced risk in the portfolio to the minimum.
[...] the cessation of the FHOG in December) is inconsistent with the frantic auction activity (see here). Expect the Government to close the door on foreign buyers [...]