The real story from the housing finance stats yesterday was that the new home building boom is alive and growing and will continue going well into 2010.
Housing finance figures for October, released yesterday by the Australian Bureau of Statistics showed a 1.4% fall in the seasonally adjusted value of dwelling finance commitments excluding alterations and additions.
That made it sound like another dull month where nothing happened, especially as it was down from the reported 4.8% rise in September.
But the reality is that over $1 billion a month more is being lent for housing this year than a year ago, and much of that is going into building new homes.
And that was the reality found in the figures where new home building boom is soaring.
"The seasonally adjusted series rose 9.2% to 8,016, the highest level since August 1994," the ABS said.
That’s actually up on the 8.0% growth rate in September from August.
Looking at the figures another way, from October 2008 to October of this year, the number of new home building contracts financed more than doubled, to 8,016 from 3,951.
The value soared 92% from $987 million in October of last year to $1.894 billion in October 2009, the highest for monthly value for years.
The ABS said that "In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell slightly, decreasing from 26.1% in September 2009 to 26.0% in October 2009.
"In original terms, the number of fixed rate loan commitments as a percentage of total owner occupied housing finance commitments decreased from 5.6% in September 2009 to 4.7% in October 2009."
The ABS said the number of new home purchases financed fell 3.9%, as did the number of existing home purchases, down 2.8%. The number and value of new homes purchased and existing homes rose over the 12 months to October, but at a more sedate rate than the soaring value and number of new home building loans.
"The number of finance commitments for the construction of dwellings for owner occupation (trend) rose 3.9% in October 2009 compared with September 2009, following an increase of 4.3% in September 2009," the ABS said.
So in trend terms, the boom in new homes continues, matching the seasonally adjusted rise.
It’s no wonder the likes of Westpac, the CBA and the ANZ are boosting home loan mortgage rates by more than the Reserve Bank’s latest 0.25%.
They, along with the NAB (which only went up 0.25%), are doing very nicely thank you from financing these first home buyers, and also buyers of existing homes, which continue to tick over.
As the RBA credit figures for October showed, home loan lending hit an annual rate of 10% in the year to October, the best for over a year and something the likes of Westpac and their fellow bankers don’t tell you in their defensive comments.
Home lending for owner occupiers is the fastest growing area of bank lending and has been for months. The banks are making hay in this area.
The reality is that the action in housing is in first home buyers sector, thanks to the federal government’s increased grants (supported by the states), announced 13 months ago, stimulating demand for new homes building.
Many building sector companies (such as Boral and Brickworks) are reporting solid growth in demand for their products from the federal government’s schools program, with demand beginning to be felt from new home building.
Next year will be when new home building replaces demand from the schools program.
