Housing markets robust
As noted a few times on this blog, there has been a lot of media chat about house prices "falling" in May, which is basically a result of the famed Daily House Price Index recording a decline in that month (as it has done every May, due to seasonality).
Meanwhile, back in the real world, the housing markets continue to look strong, with the ABS Housing Finance data recording further increases in April (click image):
This comes as no surprise, because, as I posted here, other mortgage market data has suggested the same thing, with Australian Finance Group (AF) recording the its highest mortgage demand ever in May.
In particular, AFG's data suggested to me that the markets are being driven by property investors more than ever before, a direct effect of the lowest interest rates we have seen in a generation.
At long, long last it also seems that the penny is beginning to drop that first homebuyers are not (and never were, in fact) "on strike" - they're still around but often in a different guise than in previous cycles.
Some are buying but a little later in life than before, others are buying yet aren't being recorded as first-timers, others still are buying as investors and as such slip through the net in that manner.
Shifting trends, yes...but not a "strike".
Remember that through this property cycle in Australia what we really want to see is heavy investment in new dwellings in order to generate dwelling construction and economic activity to offset the coterminous decline in mining investment.
On the face of it, construction finance for owner occupiers still looks strong for owner-occupiers on a moving annual basis.
However, what this chart doesn't quite show so clearly is that the data for the last few months is beginning to look decidedly sketchy.
Hopefully I'm wrong, but the peak may soon be in for this segment of the market (click chart):
On the other hand construction finance for investors is very strong and looks to be heading for a record heights on a moving annual basis (click chart):
In aggregate, finance for new dwellings remains strong which bodes well for the construction index, particularly for apartments.
Investor loans shatter all-time records
As for total property investment loans in April, the monthly figure printed at an astonishing $10,978,872,000.
That is comfortably the highest aggregate of monthly property investment loans ever recorded in Australia, roundly plonking a very large question mark against the suggestion that property prices have been receding (click chart):
That's certainly the on the ground experience in Sydney: the idea that one might pick up under market value bargains based upon supposedly falling prices is absurd. For decent properties, you'd be outbid very time.
The Lending Finance data for April to be released on Friday will provide more detail by state, and I have little doubt that rolling 12 monthly property investment loans in New South Wales will be at or close to record highs.
Simply, there are far too many investors in the market at present for it to be otherwise.