Home lending in Australia may be at the beginning of a downturn with the latest official figures revealing a decline in the number of new home loans approved in November.
The number of new home loan commitments dropped 0.7% over the month, according to the Australian Bureau of Statistics, after a year characterised by low interest rates, fierce lending competition and a heated property market. Excluding the refinancing of dwellings, the number of loans was down by 0.8%.
The value of home loans also declined, sliding 1% over the month. Surprisingly, the value of loans to investors – which underpinned the housing boom in 2014 – fell 2.2% according to the data. The value of loan commitments to owner-occupiers dropped 0.2%.
The number of loans for the construction of new homes dropped 2.6% over November, despite the recovery in residential construction looking promising through the middle of the year. This records the first fall in three months, which may represent concern for the economy given new home construction is a key driver of economic growth.
The Real Estate Institute of Australia (REIA) agrees, saying the sluggish figures for November 2014 may give the Reserve Bank scope to cut rates.
“With moderating housing lending, GDP growth below trend and inflation well within the RBA
’s target zone, the RBA Board should be considering a cut in interest rates at its February meeting,” REIA President Neville Sanders said.
But CommSec is more optimistic about the figures and maintains that there will be no surprises from the central bank anytime soon.
“Interest rate settings are going nowhere… heat is coming out of housing – irrational exuberance has been arrested, population growth has slowed and higher home prices are causing buyers to be a little more circumspect.”