Australian Finance Group (AFG) today released its housing finance data for the month of April, which registered the Group’s strongest monthly mortgage sales on record, with 8,005 finance commitments (valued at $3,200 million) recorded over the month, an improvement of 35% on April 2012 (see next chart).
However, AFG also recorded continued weakness in first home buyer (FHB) demand in New South Wales and Queensland, following the removal of the FHB grant on pre-existing dwellings in October 2012:
Mark Hewitt, General Manager of Sales and Operations says: ‘With greater certainty that low rates will be with us for some time, we’re seeing more confidence in the market than for some time. But recovery, like property price growth, is very patchy. For example, in both NSW and QLD first home buyers comprise only 3.5% of the market – about a quarter of the long term figure.
In fact, AFG reported huge variances in FHB mortgage share in April:
- National: 12.4%
- New South Wales: 3.5%
- Victoria: 18.3%
- Queensland: 3.5%
- Western Australia: 22.2%
We might expect FHB proportions to grow in Victoria before July 1 and the scrapping of the FHBG on existing homes, after which it’s a fair bet it will collapse like the other eastern states.
As noted last time, I would advise readers to exercise caution interpreting AFG’s figures. The Group’s market share fluctuates month-to-month and has also been rising in recent years. Therefore, its results do not necessarily translate to the overall mortgage market as captured later by the Australian Bureau of Statistics (ABS).
To illustrate, consider the below chart showing AFG’s market share, which has trended upwards since early-2011 (see next chart).
In a similar vein, the growth of AFG mortgage commitments has diverged significantly from the ABS since November 2009 (see below chart).
That said, RP Data’s Mortgage Index, which is supposed to provide a leading indicator of housing finance commitments (but is new and untested), showed a seasonally adjusted lift in April, lending weight to the idea that the ABS will show a decent bounce in finance commitments when it reports its April results next month (see next chart).
