In April, Australia recorded a decline in housing finance. A drop of five percent in investor lending played a significant role in causing the fall. This shows that investor lending continues to be hampered by macro prudential policy targets, with lenders being cautious of the regulatory investor lending growth target. However, investor demand for housing is expected to bolster in the months to come, underpinned by a strong rebound in prices of houses, noted ANZ in a research report.
Meanwhile, there was a rise of 1.7 percent in the total number of new loans to owner occupied, as compared with a fall of 0.7 percent in February. April’s rise was slightly smaller than the projection of market. The number of new loans continued to be at high level per month at more than 57,000. Upgraders continued to mainly drive the owner-occupier lending; however, housing affordability concerns remained a drag on first home buyers. The concerns are being increased by a weak wage growth.
Lending for buying or constructing new houses also dropped sharply in April. But the pipeline of ongoing construction of houses continues to be strong. In recent times, permits for building have trended higher. Moreover, strong house price growth and lower interest rates are expected to underpin the housing market in 2016.
Demand for housing finance continues to be strong in spite of certain weakness recorded recently, said St George Economics in a research report. The rate of growth in dwelling prices is likely to slow down; however, demand is not expected to drop sharply. House prices have grown strongly in recent years, restricting the potential for additional strong price gains, added St George Economics. Moreover, gains in dwelling price are likely to be restricted by increased supply and lower rental yields.
Meanwhile, the activity of housing construction is expected to be elevated this year. But April’s report suggests that additional growth is expected to be moderate as compared to growth recorded in recent years, said ANZ.
The material has been provided by InstaForex Company – www.instaforex.com