Show me the money: Housing finance hits 10 month high, but details are patchy

August saw housing finance lift a solid 2.9% on the prior month to reach $18.438 billion, the highest monthly total since October 2018. Recording the third successive aggregate monthly increase, as first home buyers continued to expand their share of the total finance market. They accounted for 19.6% of total loan value, their highest share since December of 2009!

Although it is not the only measure, and rising debt is not necessarily a positive for the economy, the latest housing finance data is sending some positive signals. As the chart below shows, total housing finance was moved higher in August by all three main groupings experiencing a lift in the value of loans. In addition to first home buyers, the value of loans to investors lifted 5.7% in August, while those to owner-occupiers were 1.9% higher.

Fig. 6

The first home buyer experience can be seen in the next chart, which shows the number of loans to first home buyers compared with those to non-first home buyers and the average value of those loans. In Aug, first home buyers took out 9,869 loans at an average value of $367,010, while non-first home buyers took out 22,943 loans at an average value of $414,010.

Fig. 7

Drilling a little further into the detail, we can see that for new construction, the market is still a little soft, with the value of loans for new construction declining for the sixth successive month in August. Lending to owner occupiers fell 0.8% compared with July, totalling $21.600 billion, while investors saw the value of loans lift 0.9% to $11.325 billion.

Fig. 8

To round out this scan of the housing finance market, lending for Alterations & Additions remains sluggish but appears to be displaying the first signs of having bottomed out, if not turning the corner.

The chart below shows that in August, loans for owner occupiers were up 4.5% to $284 million. That is welcome news, but in some respects, the most welcome news is the shape of the chart. It shows a very clear and orderly downturn in lending that commenced mid-2017, a plateau from the start of 2019, and most recently, a modest ‘tick up’ in August. That ‘looks’ like a recovery of sorts could be underway. But still, some seasonality may apply and moreover, we know that one swallow does not a summer make!

Fig. 9

To go straight to the dashboard and take a closer look at the data, click here.

This article was written by Jim Houghton for FWPA’s latest StatisticsCount.