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Home Lending Decline Eases, Approvals Signal Worsening Shortages


Today’s housing-related data for February and March is not what would be expected after over 300bp of tightening. Not only did CoreLogic report a 0.6% m/m rise in March home prices, but consistent with this home loan values fell at their lowest rate since May 2022 and previous months were revised up. Building approvals were less than expected but January was revised up. They are notoriously volatile due to the apartment component. Immigration is supporting the housing sector and talk of the RBA being close to a peak may also be injecting a bit of confidence.

  • Home loan values for February fell 0.9% m/m after an upwardly revised -2.4% the previous month. They are now down 30.9% y/y off the January 2023 trough of -32.6% but still over 18% above February 2020. Owner-occupied loans fell 1.2% m/m and -30% y/y after -2.1% and -32.6%. Investor loans fell 0.5% m/m, the highest since March 2022, and -32.6% y/y but the level of lending remains strong at 47% above pre-pandemic levels.
  • The value of first time homebuyer loans rose 0.9% m/m, the first increase since August 2022, they are still down 26.8% y/y, but off the December 2022 trough of -35.6%. The number of new loans though fell 3.5% m/m after -4.6%.
  • The ABS reported that refis rose 3.5% to a record high, as mortgage holders come off fixed rates and look for better deals.
  • Building approvals rose 4% m/m with private houses rising a robust 11.3% but not fully unwinding the seasonal January drop of 13.5%. Total approvals are now 21.6% below pre-Covid levels with houses -1.9% but multi-dwelling units 45.9% below - this trend is exacerbating Australia’s housing shortage and is also likely to support prices and rents going forward.
Australia value of new housing loans

Source: MNI - Market News/ABS

Australia number of dwellings approved - private sector houses

Source: MNI - Market News/ABS

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