A whiff of something better in the economy, a statistical blip or something else?
Whatever, yesterday’s home loan approval figures for May suggest that demand for housing finance might be starting to re-emerge.
But at the moment much of the extra demand seems to be coming from refinancing of existing loans as cautious homeowners and investors noted the talk in May from the Reserve Bank about a possible rate rise, and moved to refinance existing loans.
The Australian Bureau of Statistics figures showed a second solid month of growth in demand for home loans, especially from the banks which enjoyed a buoyant month.
The idea of an emerging recovery in housing is sort of supported by the small rise in May building approvals for private dwellings.
But then the carbon tax publicity might very well end this small glimmer of light for the home building sector.
But whatever happens, there’s was a small improvement evident in May from the 4.4% rise in home loan approvals to 49,437.
The increase was a touch under the 4.5% estimate from the market.
But it should be pointed out that a sharp rise in demand for financing of existing home loans was part of the driver.
The ABS said there was an 11.4% jump in the number of refinancing commitments for owner-occupied housing.
That was the largest rise in percentage terms since March 2001.
That no doubt contributed to the solid 5.7% jump in lending by banks in May.
Non-bank lending dropped a sharp 7.5% in the same month, so the benefits were with the banks, especially the big four.
The ABS said the total housing finance by value rose 2.9% in May, seasonally adjusted, to $20.497 billion.
The seasonally adjusted estimated value for owner-occupied housing finance rose 2.2% nationally and was higher in all states and territories in May, according to the ABS.
And the value of investment housing commitments seasonally adjusted rose 4.4% in May 2011.
The seasonally adjusted estimate of new home loans (excluding refinancing) rose 1.1% in May 2011.
There was a solid rise in new housing finance in May, up 4.6% for the month, down on the 9.5% rise in April 2011.
Including refinancing, the seasonally adjusted estimate of loans for the purchase of existing homes rose 4.1% in May 2011, following a rise of 4.8% in April 2011.
The ABS said the number of first home buyer commitments as a percentage of total owner-occupied housing finance commitments fell from 15.8% in April 2011 to 15.4% in May 2011.
"Between April 2011 and May 2011, the average loan size for first home buyers rose $800 to $286,200. The average loan size for all owner -=occupied housing commitments fell $2,600 to $287,200 for the same period," according to the ABS.
The issues to watch will be the impact of the Reserve Bank’s changed stance in June on future rate rises (coming, but not yet) and the influence of the carbon tax announcement on Sunday.
The Housing Industry Association (HIA) said yesterday it expected jobs to be lost and costs to rise.
"Building materials and products, such as kitchen cabinets and benchtops, windows and doors, and wall linings and finishes, will increase in price, or be sourced from overseas or both," HIA chief executive Graham Wolfe said.
The cost of the carbon price would be passed down the line into inputs for each production and fabrication phase, increasing the cost to build a new home, he said.
"Families buying a new home will now face additional building costs and higher mortgage repayments."
And Brickworks said the cost of bricks would rise under the proposals.
The company claimed that under the carbon pricing scheme, products classified as trade exposed, such as steel and cement, will be heavily compensated, while clay bricks will not.
Brickworks said in a statement that house construction was likely to decline due to the carbon scheme.
But we will see. It likely won’t.
