The total value of housing finance commitments fell by 3% in the month of April, according to figures released yesterday.
Within these figures, approvals for owner-occupied housing fell by 4.9%, whereas investor loans rose by 1.4%, showing that the relatively high interest rates on home loans are placing downward pressure on the housing market.
"Housing finance data for April continues to reflect the weight of higher mortgage rates," ANZ senior economist Ange Montalti said. "Ongoing deterioration in housing affordability and caution among investors will see similar levels of finance being recorded in coming months, although further moderate downside wouldn't surprise, particularly if expectations of an interest rate rise strengthen."
Montalti said that the current trend translates into slower housing credit growth over the second half of 2008, which will provide some comfort to the RBA.
"That said, continued trend weakness in construction-related finance suggests no inroads are being made into redressing the fundamental imbalance between demand and supply," he said.
Montalti added that this is likely to intensify the inflationary pressures that have only just started coming through higher rentals.