With rate cut mania now possessing the market’s collective brain, today’s housing finance figures are old hat, even if they paint a picture of an industry in near freefall.
The Australian Bureau of Statistics said the total value of dwelling finance commitments excluding alterations and additions fell 0.9% in June, compared to May in seasonally adjusted terms.
The ABS said owner occupied housing commitments fell 1.1% and investment housing commitments were 0.3% lower.
Compared to the car industry, which continues to show some growth despite high interest rates and oil and petrol prices, the collapse in the housing sector is astonishing.
The one thing you could say about the housing sector is that its now at recession levels, so the bottom is probably closer than some think.
The ABS said the total value of owner occupied housing commitments (seasonally adjusted) fell 1.1% (down $141m) in June 2008, following a revised decrease of 5.2% in May 2008.
“The decrease this month was due to falls in the purchase of established dwellings excluding refinancing (down $95m, 1.3%), refinancing of established dwellings (down $83m, 2.2%), and construction of dwellings (down $27m, 2.5%), while the purchase of new dwellings rose (up $64m, 14.3%).
“The total value of investment housing commitments (seasonally adjusted) decreased 0.3% (down $15m) in June 2008 compared with May 2008, following a revised decrease of 6.1% in May 2008.
“The decrease this month was due to a fall in the construction of dwellings for rent or resale (down $102m, 15.2%), while rises were recorded for the purchase of dwellings by others for rent or resale (up $79m, 13.3%) and the purchase of dwellings by individuals for rent or resale (up $9m, 0.2%).”
Since when was a fall of less than 1% a ‘freefall’? OK housing market is having a tough time but that headline is worthy of The Australian for sensationalist twisting of the figures.
The highly regional nature of the housing industry makes the statistics quoted in this article virtually meaningless to all but a lender, builder or supplier with major presence nation wide. That is – very few people, and even those would appreciate some regional breakdown or analysis. Perhaps also some comment on causes rather than slavish focus on effects.
The median house price has increased in capital cities by 8.2% over the past year (Jun 07 to Jun 08) according to the same ABS report.
http://www.abs.gov.au/AUSSTATS/abs@.nsf/ProductsbyReleaseDate/A50B6B8CF85F0474CA25722900179E3F?OpenDocument
Up 14% or more in Melbourne, Brisbane & Perth. Doesn’t seem much like freefall to me! Chadstone’s median (Melbourne SE middle suburb) increased by 40% through 2007, and so did every single surrounding suburb. Most of them have fallen back by 10-15% in the first six months of this year, but even those numbers aren’t “freefall” given the size of the bubble.
Loans for housing dropping is an excellent sign if the loans are for existing houses. It appears that loans for new dwellings rose by $64M. People changing houses does not increase the wealth of the country only tends to increase house prices. It appears that the speculators are going out of the market which is good for us all.
The rental market in Sydney is tough. Most real estate people talk about renters having to “bid” for a rental. There is anecdotal evidence of banks reclaiming increasing numbers of homes because of mortgage default as well as stories abounding of owners equity in their home and degree of gearing deteriorating in the North West of Sydney which is by no means normally regarded as ” Struggle St.”