The Department of Sustainability & Environment (DSE) has released data on the number of housing transfers and mortgage lodgements/disharges across Victoria in August, which showed ongoing weakness in both housing turnover and mortgage demand.
Looking at the transaction side of the market first, you can see that the number of transfers over August was 33% higher than the record low recorded in March 2013 (see next chart).
However, the data series is not seasonally adjusted and is, therefore, inherently volatile. Accordingly, it is presented below on a rolling annual basis, which allows comparison to the same month the year before, therefore, overcoming issues around seasonality (see next chart).
As shown above, the annual number of housing transfers in August (168,956) was slightly above the record low registered in the year to March 2013 (167,200), although is remained 12% below the decade average.
The DSE’s mortgage finance statistics are unique in that they provide data on both mortgage lodgements (i.e. new mortgages) and mortgage discharges (i.e. mortgages repaid in-full). Below is a chart showing both series on a 3MMA basis, which shows a healthy bounce over recent months:
However, the next chart shows the same data on a rolling annual basis (again overcoming seasonality), which shows minimal uplift:
And below is the number of net new mortgages created, calculated by subtracting mortgage discharges from mortgage lodgements:
According to the DSE, the number of mortgages lodged in the month of August was 839 less than the number of discharges. Similarly, on an annual basis, the number of mortgages discharged (189,664 in August) continued to exceed the number of mortgage lodgements (187,352 in August), meaning that 2,312 mortgages were lost in the State of Victoria in the 12-months to August 2013, up from from 1,799 mortgages lost in the year to July. The net loss of mortgages over the past year also compares to an average 11,876 net mortgage creations annually since the series began in 2002.
Despite the ongoing strong auction clearance rates for Melbourne, suggesting an increase in buyer activity, the aggregate data remains soft, with only modest improvement in both transaction volumes and mortgage demand. When combined with the still elevated number of listings, the Victorian (Melbourne) housing market’s fundamentals remain weak.
