The Australian Bureau of Statistics (ABS) has just released housing finance data for the month of May, which registered a seasonally-adjusted 1.8% increase in the number of owner-occupied finance commitments over the month. It was the fourth consecutive increase in owner-occupied commitments, but missed analyst’s expectations of a 2.2% rise.
The number of owner-occupied housing finance commitments (excluding refinancings) registered a seasonally-adjusted 2.6% increase over the month of May to be tracking 5% above the five-year moving average level. The series is also up 15.1% on May 2012.
The average loan size was essentially flat over the month, but has risen by 0.9% over the year. The below charts show the series on a 3-month moving average basis (in order to smooth volatility). Note the the improvement in average loan size since falling over the first quarter.
First home buyer (FHB) commitments continued to recover, recording a 17% non-seasonally adjusted gain in May, but represented just 14.6% of total owner-occupied commitments. They were also 11% lower than May 2012 (see below charts).
The ABS only provides the value of investor finance commitments. These were up by 1% in May, by 24% over the year, and were at the highest level since June 2007, suggesting that investors continue to drive much of the growth in housing demand and prices (see next chart).
Overall, this release is fairly strong, which is being reflected in recent house price data. Moreover, while first home buyers (FHBs) remain largely absent from the market in percentage terms, replaced by strong demand from investors, their numbers are at least improving. That said, FHB demand is likely to weaken, once again, from July as changes to FHB Grants favouring new construction over pre-existing dwellings take effect in Victoria, Tasmania and the ACT.
