Today’s housing finance data for January contained some good news for home builders, with mortgage demand for new housing jumping by 3.6% in January (see below charts).
The news is better when measured on a rolling annual basis, with the number of finance commitments for new homes and construction rising by 17.2% over the year (see next chart).
Looking at at the state-by-state breakdown, which is presented below on a rolling annual basis since it is not seasonally adjusted, shows that the lift new home finance continues to be driven by New South Wales and Western Australia, although Queensland and South Australia are in an uptrend as well (see next chart).
The jump in new home finance should go part of the way to fulfilling the RBA’s plan for housing to fill the void as the mining boom unwinds. That said, given that mining investment (captured below by engineering construction) is roughly 2.5 times the size of residential building, the rebalancing task remains epic (see next chart).
With land prices remaining stubbornly high, and state planning systems, taxation, and infrastructure provision remaining unfavourable towards new development, there are obviously also major structural barriers working against rebalancing.
unconventionaleconomist@hotmail.com
