Don’t listen to the stuff being talked about more interest rate cuts to boost a flagging economy next year – just look at the home loan figures from the Australian Bureau of Statistics yesterday.
They show the sector is heading into the New Year with its ears pinned back.
Loans to build new homes in October were close to all time highs – so much for all that talk about the new home sector slowing.
These figures will cause the Reserve bank to pause any consideration of a rate cut until it sees data for November and December by the time of its first meeting in February of next year.
The number of home loans approved in October rose 0.3%, seasonally adjusted, a touch stronger than the 0.1% forecast by economists.
The loan data was issued after the latest monthly survey of consumer confidence from Westpac showed a sharp fall to a three year low. That was after the monthly NAB survey showed a fall in business confidence and conditions last month.
But job ads rose last month and have risen for much of this year. The November jobs data from the ABS are out later this morning.
The ABS said there were 51,720 approvals in the month, compared to 51,560 approvals in September, while the value of total housing finance rose 1.0%, seasonally adjusted.
The ABS data shows the value of loans to both investors and owner occupiers for new home construction hit $3.64 billion in October, up 1.8% from September and the second highest result ever recorded.
October’s figure was only just under the all-time high of $3.67 billion in February of this year.
Loans for owner occupiers buying or building new homes rose 2.1% to a record $2.85 billion.
The number of loans for the construction of new dwellings rose in October to 6,436, the highest since January 2010 when more than 6,500 were approved.
For investors looking to build, loan approvals edged up half a per cent at $792 million for the month,but that was still 24% higher than a year earlier.
Lending to investors rose 20% in the year to October, half the pace a year ago, but growth for owner occupiers was almost flat.
CommSec economist Savanth Sebastian said the figures pointed to a boom in home building boom in 2015, which should help slow the recent surge in house prices.
"Interest rates are at record lows and we haven’t been building enough homes to house our growing population," he said.
"So it is hardly a surprise that demand for homes is at record highs."
Building approvals are still running at a solid rate, with the recovery in non private dwelling approvals in October (but that was after a big fall in September).
JP Morgan economist Ben Jarman said lending to investors is still outstripping owner occupiers, but the margin is getting smaller. Lending to investors rose 20 per cent in the year to October, half the pace witnessed in late 2013.
Growth for owner occupiers was almost flat.
The moves by the Australian Prudential Regulation Authority to concentrate on excessive lending by banks and others to investors (especially interest only loans) is expected to see a slowing in demand for loans from this sector next year.
APRA says it will scrutinise lenders whose investor loan books are growing at 10% or more a year and could force some to raise more capital to hold against these loans.
