Today’s housing finance data for July, released by the Australian Bureau of Statistics (ABS), posted a large fall in overall finance commitments, led by crashing investor demand.
According to the ABS, the total number of owner-occupier finance commitments (excluding refinancings) fell by 0.8% in July in seasonally adjusted terms and was down 9.6% over the year:
Within this owner-occupied segment, first home buyer (FHB) demand rose 0.6% in July but was up 6.6% year-on-year, with the share of owner-occupied finance commitments rising to 18.0%:
The recent rise in FHB mortgage demand has been driven by NSW and VIC, where FHB incentives were implemented from 1 July 2017. FHB commitments were up by 24% and 14% in NSW and VIC respectively relative to July 2017:
The value of investor finance commitments fell another 1.3% in July and were down 15.7% over the year:
Moreover, the annual share of total loans going to investors (excluding refinancings) fell to 43.3% in July and remained well below the peak of 52.9% recorded in July 2015:
The average loan size rose in July, up 0.2% over the month and was up by 7.2% over the year:
Next, the below chart tracks the annual growth in the value of finance commitments, and shows that the trend in owner-occupied finance (excluding refinancings) has only recently turned down whereas investor finance commitments are crashing, with total mortgage growth also falling sharply:
Thus, despite the FHB boost via State Budget stimulus in NSW and VIC, housing finance overall is tanking.
This continues to auger very badly for house prices, particularly given the very strong correlation between investor finance and house price growth:
House prices will keep falling based on this release.
