Home loan approvals surge in March 2013
THE biggest jump in home loan approvals in four years has all but confirmed the housing sector is recovering after a difficult couple of years.
The number of home loans approved in March rose 5.2 per cent, official figures show. Source: AAP
The number of home loans taken out in March jumped by 5.2 per cent compared to the previous month, the Australian Bureau of Statistics said.
It was the biggest month-on-month increase since March 2009, when the market was benefiting from the government’s stimulus package and low interest rates.
“The housing market is in recovery mode,” CommSec chief economist Craig James said.
The number of home loan approvals has now risen for three consecutive months while house prices have also increased since the start of 2013.
The March figures showed strong rises in the number of loans taken out for the purchase of established homes, construction of new homes and a 21.1 per cent jump in loans for new dwellings.
Mr James said the housing sector was likely to continue to improve, helped along by the Reserve Bank of Australia’s latest interest rate cut.
He said the rate cut was good news for developers and people working in housing construction and would have flow-on benefits for building material suppliers and retailers who specialised in household goods.
Master Builders Association chief economist Peter Jones said the figures were welcome news for the struggling housing construction industry.
But Mr Jones warned that it was too early to say for certain if a recovery was underway.
“There needs to be a much longer run of positive figures to confirm a recovery,” he said.
“However, builders may be relieved to see these figures, which suggest that new housing activity may have finally found a trough.”
JP Morgan economist Tom Kennedy said the size of the increase in home loans in March was likely to be exaggerated by the timing of so-called “Super Saturday” auctions.
Super Saturday occurs a week before Easter weekend, when the number of auctions increases as real estate agents try to lock in sales ahead of the Easter long weakened.
The day sometimes falls in April but occurred on March 23 this year, possibly giving a boost to the monthly figures.
He said that, even accounting for that change, the March figures were strong.
“Even though today’s data may be slightly overstating the strength of the home loan figures, I would say the underlying trend is certainly one of improvement,” he said.
But there was one point of concern for economists: the percentage of loans taken out by first home buyers fell to its lowest level in nine years.
“It suggests that investor and owner-occupier activity for non-first home buyers is really the driving force here and I would expect investors to become more active over the coming months as they take advantage of low interest rates,” Mr Kennedy said.
Source: Evan Schwarten (AAP, 13 May 2013)