Odd isn’t it how the sceptics about the impact of the December economic stimulus package have now been proven wrong on two counts.
Firstly they said there was no impact; then the retail sales figures for December and January proved them wrong.
Then they said people were saving the money, but higher savings is good news. It means people are being prudent and rebuilding their finances.
The sceptics ignored signs in December of a small uptick in interest, which got stronger in January in the building approvals, and much stronger yesterday in the housing finance figures.
Now some are saying it’s a bad thing because what happens when interest rates rise.
Well, what happens when interest rates rise? People repay more, and younger first home buyers get to understand the financial structures that many older home owners and buyers have had to learn.
Last week’s building approvals figures were widely described as being bad: the small rise in new home approvals was all but ignored by come commentators.
Yesterday’s housing finance figures were much harder to ignore: the sceptics were quiet.
The Australian Bureau of Statistics said: "In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions increased 0.7%. Owner occupied housing commitments increased 2.3%, while investment housing commitments decreased 3.8%."
So private buyers are enthusiastic, investors remain cautious because they are finding it hard to get finance as the banks cut back their lending to the property sector, as they do when facing losses and rising unemployment.
And first home buyers are there in force: they are at an 18 year high according to the ABS, making up 26.5% of all owner occupied housing commitments in January.
Overall home loan demand grew by a seasonally-adjusted 3.5% to 55,628 loans in January, the fourth consecutive month of growth.
In October, as part of its $10.4 billion stimulus package, the government doubled the first home owners grant to $14,000 for purchases of existing homes and to $21,000 for those buying new properties.
The increased grants are due to end in June.
While the total loan demand increased in January, the gain was less than the 4% expected by economists.
The number of loans for the purchase of new dwellings fell 1.4% January, while commitments to build homes was up 2.5%.
The 4% fall in interest rates since last September has played a big part in attracting more buyers.
But not among investors: that’s clear from the building approvals figures and from yesterday’s fall in investor finance.
The payments under the second stimulus package started flowing yesterday.
