Victoria’s Department of Environment, Land, Water and Planning (DELWP) has released February’s data on the number of housing transfers and mortgage lodgements/discharges, which suggests that Victoria’s (read Melbourne’s) housing market continues to bubble.
According to the DTPLI data, the volume of housing transfers in Victoria jumped 8.9% in the year to February 2016 in rolling annual terms (see next chart).
Mortgage discharges and lodgements are equally strong, with both lodgements and discharges up 10% over the year:
Subtracting the number of mortgage discharges from lodgements produces the next chart:
While the total number of mortgages in Victoria fell by 2,095 in the year to February, this is down sharply from the 6,263 net mortgages lost in the year to July 2014.
The ratio of lodgements to discharges was also 99.1% as at February 2016, up from a low of 97.1% in the year to July 2014:
The state government data is contradicted somewhat by the ABS housing finance data, which shows that growth in the value of total finance commitments (excluding refinancings) peaked in August 2015 and has since begun to trend down; albeit slowly:
Normally, the slowing of mortgage demand would lead to falling price growth. However, in Melbourne we witnessed a strong lift in values in the second half of last year, possibly due to the increasing prevalence of cash (foreign) buyers.
Counter intuitively, too, Melbourne’s advertised rental vacancy rate has been trending down:
At a time when dwelling construction is running well above population growth:
The only logical explanation for this phenomenon is that foreign investors are keeping a large number of homes vacant – a view supported by Prosper’s latest speculative vacancies report.
