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Monday, 11 April 2016

Queensland home loan activity trending up

February rebound

As expected total Housing Finance rebounded in February to a seasonally adjusted aggregate of $32.8 billion, driven by a month-on-month increase from January both in owner-occupier housing (+1.7 per cent) and resurgent investment loans (+4.1 per cent).

Total seasonally adjusted dwelling finance is some way below the August 2015 peak of $33.7 billion, yet given that the $30 billion threshold had never been breached before the December quarter of 2014 a monthly total of $32.8 billion remains a fairly hefty result.

Despite the monthly result bettering January's offering, the smoothed trend figures clearly suggest an orderly cooling of demand, with total dwelling finance now in a seven month downtrend.

Importantly seasonally adjusted investor lending appears to be consolidating at or around $11-$12 billion per month, down from an unprecedented high of well over $14 billion in April 2015.

The total number of owner-occupier commitments has been trending up steadily since a mid-2010 nadir, although this has been largely driven by refinancing lately and across the states the picture is somewhat mixed.

Queensland leads

At the state level the growth in owner-occupier activity has tapered off in New South Wales and Victoria. In fact, of all the states and territories only Queensland is now in a remotely convincing uptrend.

APRA's regulatory intervention has tightened serviceability criteria significantly, and in turn the average loan size has pulled back by about 8 per cent from a record high of more than $390,000 in November 2015.

This is correspondingly reflected in the total value of owner-occupier commitments at the state level, with a notable cooling evident.

In particular, there has been a pullback in new dwelling finance, which almost certainly portends the end of the residential construction boom.

Next up, a more detailed look at some of the key sub-trends.