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Local Housing Market Continues to Perplex

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2023-04-03

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Building approvals rose in February and new housing loans again eased in the same month, according to data from the Australian Bureau of Statistics on Monday.

While the total number of dwellings were up 4% in February, in seasonally adjusted terms, that went nowhere near recovering much of the 27.1% collapse in January.

And the value of new home loans loan fell 0.9% to $22.6 billion in February 2023 (seasonally adjusted), after a revised fall of 2.4% dip in January. That revision more than halved the size of the originally reported fall of 5.3% which is a small positive.

Daniel Rossi, the ABS head of construction statistics, said in Monday’s release "Total dwelling approvals have continued their downward trend since September 2022, following the conclusion of government stimulus and rising interest rates."

He said the rise in approvals in February "was driven by an 11.3 per cent rise in approvals for private sector houses, after a 10-year low in January. The result remains 13.6 per cent lower than February 2022.”

"Private sector dwellings excluding house approvals (apartments etc) fell a further 9.5 per cent in February, following a 40.3 per cent decline in January, and is at its lowest level recorded since July 2012," Mr Rossi said.

"Across Australia, total dwelling approvals increased sharply in Tasmania (+122.1 per cent), while South Australia (+28.5 per cent), New South Wales (+14.0 per cent) and Victoria (+8.5 per cent), also rose. Queensland (-13.7 per cent) and Western Australia (-6.4 per cent) fell in seasonally adjusted terms.” That looks more like local government bodies clearing backlogs of applications and approvals.

"Approvals for private sector houses rose in all states: Queensland (+18.8 per cent), Victoria (+10.3 per cent), New South Wales (+9.9 per cent), Western Australia (+2.4 per cent), and South Australia (+1.6 per cent).

"The value of total building approvals rose 19.7 per cent, following a 19.2 per cent fall in January. The value of total residential building approvals rose 7.7 per cent, comprised of an 8.4 per cent increase in new residential building and a 3.7 per cent rise in alterations and additions.”

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Looking at home lending in February the ABS said that refinancing of existing loans hit a new all-time high in February.

According to Dane Mead, the ABS head of Finance and Wealth “the value of owner-occupier housing loan refinancing between lenders rose 3.5 per cent to a new record high of $13.6 billion in February 2023.

"Borrowers continued to switch lenders for lower interest rates as the RBA’s cash rate rose,” he pointed out.

Despite that record level, the ABS said the value of new owner-occupier loan commitments fell 1.2% to $15.0 billion in February 2023, while the value of new investor loan commitments eased half a per cent to $7.6 billion.”

As a result, the ABS said that housing finance again fell from the record highs in January 2022, with the total value of new loan commitments down 33% since then.

The number of new owner-occupier first home buyer loan commitments fell 3.5% in February 2023, after a revised fall of 4.6% in January (The fall was 7.6% originally reported).

“Owner-occupier first home buyer lending continued to decline from the high reached in January 2021, to the lowest level seen since May 2017. It was also 27 per cent lower than February 2020, prior to the COVID-19 pandemic,” Mr Mead said.

That fall coincides with the end of Federal and State government assistance programs.

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