Home loan demand falls again

March 14, 2018

Home loan demand fell again in January, according to new data by the Australian Bureau of Statistics.

According to the latest data from the Australian Bureau of Statistics, 54,443 home loans were approved throughout January 2018 – down 1.1% from the month prior when 55,161 home loans were approved.

January marks the lowest number of dwelling commitments since May 2017 when 54,410 loans were approved.

“This is the second consecutive month we have seen a drop in the number of approvals. The fall is consistent with expectations that the housing market is starting to come off the boil” Mortgage Choice chief executive officer John Flavell said.

Mr Flavell said the ABS’ data was supported by CoreLogic’s Hedonic Home Values Index which found property price growth had eased considerably across most capital cities.

“National dwelling values slipped 0.1% in February, taking housing values 0.8% lower since peaking in September 2017,” he said.

“Sydney prices fell by 2.4% in the three months to February 2018, followed by Darwin which saw values fall by 2.0% over the same quarter.

“Unsurprisingly, the data points to a steady market that is easing slightly. What’s more interesting is the changing shape of the market” he said

“The ABS data shows an increase in the commitments for the construction of dwellings. Based on January’s seasonally adjusted data, the purchase of established dwellings fell 1.5% and the number of construction dwellings increased 3.1% when compared to the prior month.

“This is likely to be driven by the increasing volume of First Home Buyers entering the market, fuelled by first home buyer incentives in New South Wales and Victoria.

“In January, the total value of all home loans approved rose slightly by 0.7% to just over $33 billion.

Looking ahead, Mr Flavell said home loan demand would likely remain robust.

“The reality is, mortgage interest rates are still low by historical standards which should help keep demand relatively strong.”