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Owner-occupier lending up just 0.1% in October as first-home buyer numbers fall but investor and upgrader loans rise: ABS
The total number of owner-occupied housing finance commitments rose by just 0.1% over October in seasonally adjusted terms, according to new ABS figures.
This was well below market expectations of 3%, with Westpac forecasting the number of loans to owner-occupiers to rise by 3.4% in the month.
The principal cause of the poor monthly growth was poor take-up of loans commitments for the purchase of established dwellings, which fell 0.1% to 38,900.
Construction loans fell 0.3% to 4,903, while loans for the purchase of new dwellings lifted by 4.2% to 2,673.
Total loans to owner-occupiers totalled 46,477 up from an upwardly revised 46,425 in September.
On a state-by-state basis, finance to owner-occupiers increased in Queensland (1.3%), WA (1.3%) and SA (3.4%), but fell in NSW (-1.7%) and Victoria (-1.3%) partially reversed gains in September.
In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 18.7% in October 2012 from 19.4% in September 2012.
The average size of a first-home buyer loan fell $1,300 to $288,000.
The average loan size for all owner-occupied housing commitments fell $1,300 to $298,900 for the same period.
In value terms, housing finance rose by 1.8% to $21.56 billion on a seasonally adjusted basis.
According to Westpac, the positives to come out of the October data was lending to existing owner-occupiers (upgraders) advanced 1% in the month, to be 8% higher over the year, while "investor finance, which can be volatile month to month, was up strongly, 5.5% in the month, following an 8.8% jump in Sep, to be 21% higher than a year".
"Uptrends in lending to upgraders and investors provide confirmation that lower interest rates are providing a boost to the housing market," says Westpac.
"Finance to FHBs has jumped 15% since March, although is only 0.5% higher than October 2011. We anticipate that the uptrend in the FHB market evident since March will continue, as people respond to the marked improvement in housing affordability. However, this cycle is likely to be tempered by household's more prudent approach to taking on additional debt.," says Westpac.
According to JP Morgan economist Tom Kennedy, the fall in owner-occupier and first-home buyer loans suggests the RBA may need to cut the cash rate to further stimulate the housing sector - one of the sectors the RBA is counting on to pick-up as mining investment peaks.
"The data today just reaffirms that there are numerous headwinds out there," he told AAP.
"That's another reason that really supports further rate cuts."
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It was interesting to review RP Data's top locations with the highest 2013 yields across the nation for houses. All 10 were within regional mining precincts.