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Rebound in housing finance ‘unlikely’ as slump continues

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Charbel Kadib 6 minute read

The trend in housing finance volumes remains “very weak”, with “little reason” to expect a “positive turn” in the near term, according to an analysis of new ABS data.

The latest Lending to Household and Businesses data from the Australian Bureau of Statistics (ABS) has reported that, in seasonally adjusted terms, the value of lending to households for dwellings declined by 2.1 per cent in January, following on from a 5.9 per cent drop in December 2018.

The January decline was driven by a 4.1 per cent fall in the value of lending to investors and a 1.3 per cent slip in the value of new owner-occupied finance commitments.  

When assessed year-on-year, the total value of housing finance commitments is down by 20.6 per cent, spurred by a 28.6 per cent reduction in the value of investor dwelling commitments and a 17.1 per cent fall in the value of owner-occupied commitments.


According to ANZ Research, despite slowing month-on-month, a reversal in the downward trend in housing finance is unlikely in light of current lending standards. 

“The pace of declines in housing finance eased in January from the sharp declines in December, but the trend remains very weak, with a positive turn unlikely in the near term,” ANZ Research observed.

“Further improvements in housing affordability or a significant loosening in lending standards would be the necessary precursors to an improvement in finance and the housing market overall.”

ANZ Research added: “At this stage, there is little reason to expect a rebound in finance, as tighter lending standards remain in place.”

However, the Housing Industry Association’s chief economist, Tim Reardon, expects the credit squeeze to “ease” towards the middle of 2019 but warned that if tighter credit policies persist, the pipeline of building activity would be “exhausted rapidly”.


“The home building industry has driven economic growth in Australia since the end of the resources boom,” Mr Reardon said.

“As the housing boom cools, the industry will be reliant on a strong national economy to ensure that this is a relatively shallow downturn.”

The ABS data also revealed that lending to households for personal finance increased by 1.2 per cent in January but has fallen 16 per cent year-on-year. 

The value of lending to businesses also increased, rising by 10.8 per cent in January and 4.1 per cent when compared to the previous corresponding period. 

In total, the value of lending commitments rose by 4.1 per cent but declined by 7.4 per cent year-on-year. 

 [Related: Loan approvals fall across the board]



Rebound in housing finance ‘unlikely’ as slump continues
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Charbel Kadib

Charbel Kadib

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

Email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.


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