It’s too early to be jumping for joy, but the latest housing loan figures support hopes for better times in the home building industry.
The two per cent bounce in February was not enough to restore the number of home loan approvals to the 2012 average. It fell fractionally short of the mark.
But things aren’t quite as dreary as that suggests.For the wider economy; it’s not just the number of home loans that matters.The value of home loan approvals is important. And then there are investors, not generally mentioned when the “home loan” figures from the Australian Bureau of Statistics are reported every month.
But counting investors along with home buyers, the total value of housing finance approvals to both investors and home buyers in February was $21.83 billion, compared with the 2012 average of $20.61 billion.
In other words, the value of housing loans being pumped into the Australian economyis running at more than 2 billion a month above the average for last year.
Last month the Reserve Bank of Australia was cautiously optimistic about the prospects for the home building sector. “Overall, recent housing market developments pointed to a further moderate increase in dwelling construction in the period ahead,” the central bank said in the minutes of its board’s monetary policy meeting earlier in March.
The housing market is dominated by established homes, but sustained strength in demand for established homes can usually be counted on to boost demand for new housing, which then generates a cascade of activity through the rest of the economy.
The value of lending for new housing, including those investor loans identified by the ABS as going into construction, was $2.70 billion in February, 24 million or five per cent above last year’s average.
There is a long way to go before the housing sector is running quickly enough to beable to grab the baton as the resource investment boom tops out. But it does seem at least to be heading in the right direction.
Source: Garry Shilson-Josling, AAP Economist courtesy of Shaw Stockbroking