Owner-occupied market growth slowing

by Amy Rosenfeld12 Feb 2014
Last month saw the slowest growth in the owner-occupied market for the past year.

Housing finance figures for December 2013 show, in trend terms, that the number of owner-occupied finance commitments rose by 0.3%, following increases of 0.5% in October and November. This is the lowest monthly increase, in trend terms, since December 2012.

If refinancing is excluded, in trend terms for December, the number of owner-occupied finance commitments increased by 0.6%, says REIA president Peter Bushby.

 “Increases were recorded in New South Wales, Queensland, Western Australia and Tasmania, with New South Wales having the biggest rise, up 1.0%. The Northern Territory’s fall of 2.0% was the country’s largest," says Bushby.

“In trend terms, the number of commitments for the construction of new dwellings climbed 1.1% and the purchase of established dwellings went up 0.3%, however the purchase of new dwellings fell by 1.1%.”

Investors continue their strong presence on the market with the value of investment housing commitments increasing 3.0% in December, resulting in almost three years of consecutive monthly increases.

“The proportion of first home buyers in the number of owner/occupied housing finance commitments rose from its historically lowest point of 12.3% in November 2013 to 12.7% in December 2013. The figure is alarmingly lower than the long-run average proportion of 19.9%, despite eight interest rate cuts since November 2011," says Bushby.

“December 2013 results highlight the need for Government to act on housing affordability and to stem the rapid decline in the number of first home buyers."

The ABS data also shows capital city dwelling prices increased by 3.4 per cent in the final quarter of 2013 and were 9.3 per cent higher than a year earlier, according to HIA senior economist Shane Garrett.

Steady and sustainable price growth reinforces confidence in the market and healthy lending activity must be seen in this context,” says Garrett.

“In order to maintain a healthy level of activity in the market, more will have to be done to deal with constraints around planning, land supply and infrastructure funding. Addressing these issues will do much to improve longer term housing affordability and will ensure that Australia achieves its full economic potential over coming years and decades."