Housing Finance Approvals
After running red hot on the heels of low mortgage rates and the Boost to the First Home Owner's Scheme last year, housing finance approvals have taken a hit in recent months. In January, the number of owner-occupied housing finance approvals declined by 7.9%, the fourth consecutive decline. Investor housing however bucked the trend increasing by 0.9% in January after a 1.6% rise in December.
Given this apparent fall in housing finance demand in the owner-occupied market both in terms of the new and established segments, it's a little surprising that the tone of the re-sale market has maintained its vigour so strongly. But for the new housing market, it seems that a lot of demand was satisfied and brought forward into last year; we are now seeing some payback to last year's bloated sales with less purchasing in the first part of this year. We expect another decline in February.
Volumes (Owner-Occ): L:-7.9% (Jan); F: -1.0% (Feb) Values: L: -5.0% (Jan); F: -3.0% (Feb)
Westpac Consumer Sentiment, April (Wed, 10.30) Despite the RBA rate increase in March, consumer confidence edged higher by 0.2%, underpinned by strong data on unemployment and GDP. The index had fallen 2.6% in February, so it remains below the level seen in January, but confidence is still up 37%yoy, and around 17% higher than its long term average. The March level of the confidence index is consistent over time with solid 3-4% growth in household consumption growth. It suggests that interest rates have not yet reached a level where they are having a major impact on consumer sentiment, with consumers remaining buoyant due to the strength of the labour market and house prices. But following the April RBA rate increase, the fifth increase since October, it will be interesting to see if confidence is significantly affected. L: +0.2% (March)
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