Today’s housing finance data for September, released by the Australian Bureau of Statistics (ABS), posted another heavy fall in overall finance commitments, with both investor and owner-occupied demand collapsing.
According to the ABS, the total number of owner-occupier finance commitments (excluding refinancings) fell by 0.5% in September in seasonally adjusted terms but has crashed 12.3% over the year:
Within this owner-occupied segment, first home buyer (FHB) demand fell 8.8% in September an was down 9.3% year-on-year, with the share of owner-occupied finance commitments at 18.0%:
The recent bounce in FHB mortgage demand has been driven by NSW and VIC, where FHB incentives were implemented from 1 July 2017. However, these too are now falling. FHB commitments were down 6% in NSW relative to September 2017 and have fallen by 14% year-on-year in VIC:
The value of investor finance commitments fell another 2.8% in September and has crashed 18.1% over the year:
Moreover, the annual share of total loans going to investors (excluding refinancings) fell to 42.9% in September and remained well below the peak of 52.9% recorded in July 2015:
The average loan size fell in September by 2.6% but was up 2.6% over the year:
Next, the below chart tracks the annual growth in the value of finance commitments (-5%), and shows both owner-occupied finance (excluding refinancings) and investor finance growth falling fast:
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:
Given this data, the outlook is poor and house prices will keep falling.
