AFG vs O/O housing finance

As H&H  mentioned,  the ABS updated housing finance data yesterday. The dataset that was updated is the ABS 5609 which contains the breakdown of housing finance for owner occupiers. In order to get the full picture, including the breakdown of investor financing, we need to wait for the ABS 5671 dataset, but it will not be updated until the 14th.

In the meantime I thought I would provide some charts comparing owner occupier housing finance for existing houses, in both volume and dollar terms, to AFG’s mortgage volume figures as this seems to be a good indicator of where the market is heading in the short term. Obviously these figures are before any effects, if any, from the latest rate cut.

Firstly on a national basis the trend looks flat with a falling bias next month:

NSW is looking a bit more like growth, but again with a slight falling bias next month:

Victoria is looking flat, which again is a big concern given the supply side:

WA looks to be attempting some growth, but next month doesn’t look like it is going to help:

And finally QLD remains in the doldrums:

So overall there doesn’t seem to be much of a pickup from the owner occupiers for the purchase of existing houses. The real area of growth in the headline figures is refinancing from both New South Wales and Victoria.

On those figures I would predict the slow melt continues.

Comments

  1. I’m glad that you put the AFG data back in your tool box. That along with the SQM stock on market are two great free indicators that are almost real time.

    Perhaps Louis could drop in and give us some hints on the effect of the rate reduction in a week or two.

    I won’t disagree with you analysis, although I’m slightly more bullish, but not much. I’ll stick with my “Great Big Nothing” until I see genuine movement one way or another.

    Note though that we had a similar fall in Sept/Oct 2010 before a seasonal uptick for XMAS, and then that fall in Jan 2011 which I hope won’t be repeated on the same scale next January – one flood was quite enough for me.

    • > and then that fall in Jan 2011 which I
      > hope won’t be repeated on the same
      > scale next January – one flood was
      > quite enough for me.

      I am afraid that it will be repeated but this time for different reasons. First of all, we still have growing housing stock on market and given the global uncertainties it seems extremely unlikely that this will change between now and Christmas. The escalating crisis in EU is affecting people’s confidence with still fresh memories of the Lehman debacle. This and the newly found frugality will likely further affect retail which in turn will lead to job losses. Then finally the global disturbances will start leaking into our finance and real economy. Obviously something may change e.g. QE3, ECB printing and PBoC relaxing domestic credit but at this stage it looks like we need a much deeper slump before printing presses get restarted and the deeper slump will further damage the housing market.

      • JPK – the growth in stock numbers seems to have peaked, except perhaps for Melbourne.

        There certainly is a lot of market fear, but nothing like the levels I saw in 2008 when the Dow was faiing 500 points every night.

        You may end up being right, but my money is on the other horse.

      • > JPK – the growth in stock numbers seems to have peaked, except perhaps for Melbourne.

        In October this was only the case for Darwin, Brisbane and Perth. Everywhere else, including the total across the nation, the stock in October was higher than in September. You can check in on the SQM website. In any case it’s quite high considering that we are at the peak of traditional buyer activity which may have attenuated price declines a bit.

      • Ah well I was going on not just the slowing trend in those numbers, but also something that Louis Christopher said recently in an interview.

        Sorry no link for that.

        Two things to consider – trends will never be in a straight line anyway, and the numbers can’t go up infinitely. People who don’t have to sell won’t even list if they know the market is crowded with sellers.

      • Is that based on the SQM numbers? The RP Data “stock on market” numbers are rising in each state:

        % chg No. of homes for sale 2/10/11 to 30/10/11:
        QLD +3.6%
        NSW +8.2%
        VIC +8.3%
        WA +2.4%
        SA +4.5%
        NT +1.0%
        ACT +11.0%
        AUS +5.7%

        Mind you the RP Data numbers have risen higher and more quickly this year compared to the SQM figures, and are at a state level rather than capital cities. Regardless stock shouldn’t peak until mid-December, with plenty returning to the market after the January break.