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Wednesday, 9 September 2015

Sydney home loans soar

Housing finance up moderately

Total Housing Finance came in at a seasonally adjusted $32.8 billion in July, which represented a 1.5 per cent increase on the June result - following on from a 3.6 per cent increase in June - but remained slightly below the record high of $33.1 billion seen in April this year.

On a trend basis total housing finance ticked up to a new high of $32.6 billion to be 15 per cent higher than one year ago.

Investment loans increased moderately to $13.6 billion in July, but this was also slightly below the April high of $14 billion, suggesting that APRA's cooling measures are beginning to take hold.

On a rolling annual basis investment loans have continued to shoot the lights out through an unprecedented surge, with investors accounting for more than half of loans written excluding refinancing.

Although this is inevitably forcing prices higher in some cities, we are now increasingly seeing more landlords than prospective renters in some locations, and rents in these locations will stagnate or fall.

State versus state

At the state level there were increases in owner-occupier commitments in most states and territories in seasonally adjusted terms in July, but declines were seen in the Northern Territory and the ACT.

Driven by a fear of missing out, Sydney homebuyers are thrusting New South Wales loan values off the top of the chart with more than $73 billion of lending over the past year. A huge boom.

With APRA measures dialling back riskier investment lending as sure as night follows day lenders will be targeting homebuyers, with home loan products now available from interest rates of around just 4 per cent. 

Brisbane's owner-occupier commitments have continued their studious recovery, with loan values at the state level ticking up to their highest level since March 2010 on a 12mMA basis, although mining and resources regions are continuing to weigh heavy acting as a drag on the state data. 

As for New South Wales in July, at $7.5 billion of owner-occupier commitments in July there has never another month like it it any state or territory, with commitnents accelerating to be tracking an enormous 28 per cent higher than one year go.

The incredible Sydney property boom evidently has some steam left in it yet.

Despite this apparently indefatigable Sydney largesse, with inflation and now total housing finance apparently both under control in recent months, any further increase in the unemployment rate is likely to be met with calls for further rate cuts.

Watch this space - Labour Force next up!