Investors still running wild in housing finance

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By Leith van Onselen

The Australian Bureau of Statistics (ABS) has just released housing finance data for the month of November, which registered a seasonally-adjusted 1.1% increase in the number of owner-occupied finance commitments over the month:

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The number of owner-occupied housing finance commitments excluding refinancings registered a seasonally-adjusted 0.9% increase over the month to be tracking 8.8% above the five-year moving average level. The number of commitments were also up 16.1% on November 2012 (see next chart).

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The average loan size surged 2.5% over the month and was up 4.0% over the year. The below charts show the series on a 3-month moving average basis (in order to smooth volatility).  Note the spike in average loan size after falling since the beginning of last year.

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First home buyer (FHB) commitments fell by a non-seasonally adjusted 1.2% in November and represented just 12.3% of total owner-occupied commitments – the lowest share on record (see below charts).

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Finally, if you’re wondering what’s primarily driving house price at the moment, look no further. While the ABS only provides the value of investor finance commitments, these were up by another 1.5% in November, 35% over the year, and hit the highest level on record (see next chart).

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14 Responses to “ “Investors still running wild in housing finance”

  1. Via Cameron Kusher’s tweet, investor commitments up 35.2%, largest increase since November 2003.

    https://twitter.com/BullionBaron/status/422532101523513344

    Incidentally that was during the same quarter that Sydney house prices peaked at a nominal level, which was then not surpassed for 4 years (ABS House Price Indices).

    Seems likely Sydney will soon put in another price peak that won’t be surpassed for a long time… IMO we will see it during 2014.

    • The Patrician says:

      Holding the OCR at all-time record lows while investor mortgage debt increases 35% in a year is verging on the criminally negligent.

      • flawse says:

        Patrician…but…but…that’s the plan!!! Glen stated it over and over again. There is no negligence about it!

      • aj. says:

        That’s right fl. not only is this a good thing, the RBA wants this to spread to the rest of the country, this is how growth is made.

        Pump up the boom, pump it up, pump it up.. hey its catchy

      • flawse says:

        Well if Sunshine Coast and Gold Coast are any guide….it’s not just spreading…it’s ablaze and not a fire truck in sight.

  2. Bonza says:

    Interest rates to rise in 2014.

  3. oobles says:

    Zerohedge had a fun article showing 6 castles that cost less than an apartment in NYC. (http://www.zerohedge.com/news/2014-01-07/6-castles-cost-less-apartment-nyc)

    Just for fun I had a look at what I could find for the same price as a house in Balwyn. What would you prefer for $1.1million? This 3br house in Balwyn on 748sqm(http://bit.ly/1gizmcw ) or a French Chateau on 80,000sqm(http://bit.ly/JIBvn3 )?

    That’s based on the exchange rate now. Could of got a lot more castle six months ago for the same price. :)

    • Ortega says:

      Ya Crazy. Who needs a French castle when you can live in Balwyn mate??

      Nothin beats Balwyn.

      Except a castle IN Balwyn.

    • flyingfox says:

      I saw that article as well. It is disgraceful! More disgraceful is the fact that people are more than happy to fork out over a million dollars for ordinary houses ….

      • aj. says:

        There you go again ff – thinking that a valuation in fiat means anything… ;)

        The government can catch up this valuation with wages in a heartbeat by tinkering with the currency, and they will when they have to.

      • flawse says:

        aj?
        Which direction fixes it? Logically a devaluation (?) but MB has a bad habit of underestimating the difficulties and over-estimating the benefits.(I’m tired and not thinking too straight!)
        I reckon they’ll go the other way. Let the Aus dollar rise and pay for the ensuing mess by continuing to sell assets. It suits the Banks; suits the politicians; suits inhabitants of Sydney and Melbourne who virtually control Australia politically and administratively.. How can good policy get a look in?
        There is no other way but devaluation but it won’t do much good without widespread fiscal, monetary and prudential reform…which ain’t gunna happen!

      • aj. says:

        I think you are seeing just fine fl. I’m bullish the AUD and that’s because i think economic activity (read housing boom) and rates are on the up.

        My view is that when they need to, to protect the asset holders, they will butcher the currency. That is not now (although we saw a preview), but if the time comes it will be so.

      • flawse says:

        Thanks aj
        “I’m bullish the AUD and that’s because i think economic activity (read housing boom) and rates are on the up”

        I wasa wondering how they (Glen et al) would have to wriggle with that one….I guess it will be just an example of our well-managed economy and banking system.
        Strewth!.