More hints from the economy that things are not as sedate as you’d think after three interest rate rises.
In fact the odds are firming of yet another rate rise sooner rather that later this year.
Demand for housing finance showed a small decline in November, the month when rates went up for a third time in 2006, but you wouldn’t say that the easing in demand was catastrophic.
It was the fourth monthly fall in a row and shows that the housing market isn’t booming. But nor is it plunging backwards like the US sector has been.
The TD securities-Melbourne Institute’s latest inflation gauge showed distinct signs of continuing inflationary pressures, even after December’s rapid easing in banana prices. (see next story)
And leading electronics and furniture retailer, Harvey Norman said top line sales rose 16.7 per cent in the six months to the end of December, with same store or like for like sales up a robust 7.1 per cent, well ahead of the inflation rate.
Coming on top of the solid retail sales figures for November and December’s strong employment numbers, there’s growing pressure for another rate rise sooner rather than later.
It will all depend on the Producer Price and CPI figures to be released next week by the Australian Bureau of Statistics.
The upshot of the housing finance figures for November means that companies in the sector and supplying it (the likes of Boral, Rinker, James Hardie, CSR, AV Jennings, Mirvac, etc) had better expect no quick rebound.
It will be much later this year, towards the fourth quarter before there may be signs of a robust recovery (if at all, if rates rise in the mean time).
The ABS said yesterday that Australian housing finance commitments for owner/occupied housing fell 0.6 per cent in November, seasonally adjusted, to 61,360.
Total housing finance by value fell 0.1 per cent in November, seasonally adjusted, to $19.07 billion, housing finance by value for owner occupation fell 0.9 per cent, seasonally adjusted, to $13.631 billion.
Here’s a summary of what the ABS said:
“The total value of owner occupied housing commitments (seasonally adjusted) fell by 0.9% (down $119m) in November 2006, following a revised 1.1% rise in October 2006. Decreases were recorded for purchase of established dwellings excluding refinancing (down $126m, -1.6%) and purchase of new dwellings (down $6m, -0.9%), which more than offset increases in refinancing of established dwellings (up $11m, 0.3%) and construction of dwellings (up $2m, 0.2%). The trend series in the value of owner occupied commitments decreased by 0.6% in November 2006.
“The total value of investment housing commitments (seasonally adjusted) increased by 1.8% (up $94m) in November 2006 compared with October 2006, following a revised decrease of 4.8% in October 2006. The increase this month was due to rises in purchase of dwellings by others for rent or resale (up $104m, 24.8%) and construction of dwellings for rent or resale (up $53m, 13.9%) more than offsetting decreases in purchase of dwellings by individuals for rent or resale (down $63m, -1.4%). The trend series in total value of investment housing commitments decreased by 2.9% in November 2006.
“The number of owner occupied housing commitments (seasonally adjusted) decreased in November 2006 compared with October 2006 in Western Australia (down 349, -4.1%), the Northern Territory (down 60, -10.8%), South Australia (down 35, -0.7%), Queensland (down 29, -0.2%), Victoria (down 13, -0.1%), and the Australian Capital Territory (down 5, -0.6%). Increases were recorded in New South Wales (up 193, 1.1%) and Tasmania (up 33, 2.9%). The trend estimates decreased in all states and territories except the Australian Capital Territory while New South Wales remained virtually unchanged. “
