New home finance moderating

By Leith van Onselen

Today’s housing finance data for December registered the third consecutive monthly decline in buyer demand for newly constructed dwellings, which follows a prolonged period of strength (see next chart).

ScreenHunter_5988 Feb. 11 14.38

The number of finance commitments for new dwellings (i.e. construction plus new) fell ever so slightly (-0.03%) in December to be up 4.7% over the year and tracking some 17% above the 5-year moving average level.

The current ‘boom’ continues to approach the spike of the post-GFC episode (which was fueled by significant first home buyer stimulus). It is also more enduring, which is good news for the construction industry and renters (see next chart).

ScreenHunter_5989 Feb. 11 14.39

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 uptrend in new home finance commitments is fairly broad-based, although the trend is clearly flattening-out in New South Wales. New home finance commitments in South Australia are also flat (see next chart).

ScreenHunter_5990 Feb. 11 14.48

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Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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