By Leith van Onselen
The Reserve Bank of Australia (RBA) has just released the private sector credit aggregates data for the month of March:
Total credit provided to the private sector by financial intermediaries rose by 0.4 per cent over March 2012, after rising by 0.4 per cent over February. Over the year to March, total credit rose by 3.4 per cent.
Housing credit increased by 0.4 per cent over March, following an increase of 0.4 per cent over February. Over the year to March, housing credit rose by 5.3 per cent.
Other personal credit grew by 0.1 per cent over March, after increasing by 0.3 per cent over February. Over the year to March, other personal credit decreased by 1.5 per cent.
Business credit increased by 0.6 per cent over March, after growing by 0.4 per cent over February. Over the year to March, business credit increased by 1.3 per cent.
A chart showing the long-run breakdown in the components is provided below:
Personal credit growth (+0.1% MoM; 0.2% QoQ; -1.5% YoY) rose slightly, but remains lower over the year. By contrast, business credit (0.6% MoM; 0.8% QoQ; 1.3% YoY) and housing credit (0.4% MoM; 1.3% QoQ; 5.3% YoY) grew over the year, but at subdued levels relative to their long-run average growth rates.
Focusing on the housing market, annual credit growth hit a fresh all time (35-year) low of 5.30%. However, the below chart, showing monthly housing credit growth on a 3-month moving average basis (3MMA), suggests that housing credit growth has levelled-out after trending down since March 2010:
Finally, a breakdown of owner-occupied credit and investor credit is provided below:
For the second month in a row, monthly investor housing credit (0.5% MoM; 1.4% QoQ; 4.8% YoY) grew at a faster pace than owner-occupied housing credit (0.3% MoM; 1.3% QoQ; 5.5% YoY). However, with quarterly and annual investor credit growth remaining subdued, it’s probably still too early to conclude that investors are finally returning to the housing market.
Overall, it’s another weak data set that supports a continuation of the ‘slow melt’ in Australian house prices.
