Australian housing finance tanked in August

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By Leith van Onselen

The Australian Bureau of Statistics (ABS) has just released housing finance data for the month of August, which registered a seasonally-adjusted 3.9% fall in the number of owner-occupied finance commitments over the month. The result disappointed analyst’s expectations of a 2.5% fall.

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The number of owner-occupied housing finance commitments (excluding refinancings) registered a seasonally-adjusted 5.3% fall over the month of August to be tracking 3% above the five-year moving average level. However, the series is up 8.7% on August 2012.

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The average loan size was steady over the month, but was down 0.2% over the year. The below charts show the series on a 3-month moving average basis (in order to smooth volatility). Note the recent downward shift after the bounce over the June quarter.

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First home buyer (FHB) commitments has slumped once more, recording a 13% non-seasonally adjusted fall in August and represented just 13.7% of total owner-occupied commitments – the lowest level since April 2004. They were also 22% lower than August 2012 (see below charts).

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The ABS only provides the value of investor finance commitments. These were flat in August, but were up by 26% over the year and remained at the highest level since June 2007 (see next chart).

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Overall, this is looks like a weak release, with owner-occupied mortgage demand falling sharply, led by FHBs, and average loan sizes also starting to trend lower. It remains an investor-led housing bounce.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.