The housing boom is back – with a vengeance. Banks are now lending more to owner-occupiers than they did at the peak of the 2003 boom, as a surge of confidence has swept new lending far above previous highs.
The Bureau of Statistics reports that, excluding refinancing, banks and other established lenders lent almost $9 billion to owner-occupiers in March, up a huge 23 per cent since last June and well above the $8.3 billion record set in September 2003.
Analysts said strong population growth, rising wage growth, sharply rising employment – and now tax cuts at the top end – are likely to keep home finance booming, supporting home prices but keeping the Reserve Bank alert.
The sharpest rise has been in lending to people buying existing real estate. New lending was just under $7.5 billion in March, a jump of 26 per cent in just nine months, easily topping the 2003 high of $6.9 billion.
In sharp contrast, lending to investors fell in March and remains well below 2003 highs, at $5.8 billion. But that too has risen 10 per cent since June, and has settled far above its pre-2003 levels.
AdvertisementAdvertisementThe resurgence of the housing market comes as some economists warn that the budget’s big tax cuts for higher income earners increase the odds that the Reserve Bank will raise interest rates again later this year.
ANZ Bank chief economist Saul Eslake said the tax cuts, while welcome, could be “too much of a good thing at the peak of the business cycle. There is a real risk now that the RBA will feel the need to lift interest rates again.”
But National Australia Bank chief economist Alan Oster disagreed. “We do not share those concerns,” he said. “Our view is that the economy needs some stimulus now – to wait until the economy hits the skids is too late.”
The Reserve lifted interest rates on March 2, after making it clear a month earlier that a rise was coming. The March housing figures suggest that, as for the rate rises in late 2003, the main impact of that rise was to deter housing investors, while demand from owner-occupiers steamed ahead.
CommSec economist Carl Jensen said the rationale for investing in property was weaker now. “Interest rates are more likely to rise than fall, and house prices are not soaring. As a result, property investors will continue to look for other asset classes that offer more attractive returns.”
Loans to build new homes continued to fall but not alarmingly, said Housing Industry Association senior economist Harley Dale. He said the industry would face a mild correction over the next two years until interest rates rose again.
But Mr Dale said the proportion of first-home buyers among borrowers had fallen to 15.6 per cent, the lowest figure since last July. Housing affordability was still very low, he said, requiring continuing structural reform to reduce costs and prices.
In trend terms, lending in March to owner-occupiers hit record levels in all states except NSW. Compared with the 2003 peak, total finance in March was up 11 per cent in Victoria and Queensland, 19 per cent in WA, 13 per cent in SA and 18 per cent in Tasmania. In NSW it was 2.3 per cent below its peak.
[biggrin]http://www.theage.com.au/text/articles/2005/05/11/1115585028694.html
dmichie (and his aliases) will not like this post!
Robert Bou-Hamdan
Mortgage AdviserI think the Title ” Boom is back ” is slightly over optomistic…..[baaa]
To me , and to probably most members of the forum , boom implies soaring prices. Nothing in the article backs up the headline.
My personal observations on the markets ( eg Upper north shore , Mt Druitt and Logan ) I follow is that most of them ( with the exception of NOrth Q’land ) are on the way down.
Think the “journalistic interpretation ” on that article is more biased than the interpretation of the ” negative articles ” around at the moment.
See Change
well it makes a change from inconclusive and isolated data being described with headings such as “Property market crash”, “sky about to fall down” and “end is nigh in property market bubble”.
What it does suggest is that (as Robert has argued blue in the face before) the market could actually be just ticking along. We don’t always have to be in the midst of a dramatic event.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
dmichie (and his aliases) will not like this post!I don’t have any friggin’ aliases! Grrrr.
The housing boom is back – with a vengeance.Yes, housing credit is continuing to boom, although at least the speculators (sorry “investors”) are getting out. Looks like owner-occupiers have seen the recent falls in prices as an opportunity to “buy the dip”
Here’s a chart showing how housing credit has zoomed past business credit over the past decade.
http://203.26.51.178/cracker/54029_3.jpg
Proof that Australians are madly borrowing to buy and build houses rather than to invest in productive enterprises. This won’t end well.What it does suggest is that (as Robert has argued blue in the face before) the market could actually be just ticking along.Well, I don’t know about other parts of the country, but where I am (northern beaches, Sydney) we had an auction clearance rate of 7% last weekend (no, not 70%, 7%). I’d hardly call that ticking along.
Originally posted by dmichie:Well, I don’t know about other parts of the country, but where I am (northern beaches, Sydney) we had an auction clearance rate of 7% last weekend (no, not 70%, 7%). I’d hardly call that ticking along.
EXACTLY!!!
The situation on the Northern Beaches is not an economic indicator for the rest of the country!
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by The Mortgage Adviser:Originally posted by dmichie:Well, I don’t know about other parts of the country, but where I am (northern beaches, Sydney) we had an auction clearance rate of 7% last weekend (no, not 70%, 7%). I’d hardly call that ticking along.
EXACTLY!!!
The situation on the Northern Beaches is not an economic indicator for the rest of the country!
Robert Bou-Hamdan
Mortgage Adviser
But , Sydney leads the way in Australia. It goes up first and comes down first.
I’ve been amused at how people have still been talking up Brisbane over the last few months, when people I’ve talked to indicated that it was less than healthy.
So it came as no suprise when there was a front page article on the courier mail indicating pirces had dropped.
Melbourne is going down.
Sydney , melbourne , brisbane ….
See Change
Originally posted by SeeChange:But , Sydney leads the way in Australia. It goes up first and comes down first.
The ‘Northern Beaches’ is but a pimple on Sydney’s butt and I don’t think dmichie’s attendance at one or two auctions resulting in a 7% auction clearance rate could equate to a Sydney-wide Morgan Gallop pole.
It is more likely a crappy real estate agent or a larger decline in that particular area of Sydney.
Robert Bou-Hamdan
Mortgage AdviserI think it’s more likely a general downward trend reflective of the market in Sydney. After such a massive run up in prices, to a point where anyone not in property is now severely disadvantaged from entering, it’s only natural that we’ll see retraction. My guess is that the retraction will be as dramatic as the boom, which in this last phase was pretty dramatic.
The situation on the Northern Beaches is not an economic indicator for the rest of the country!Jeez it was just an anecdote (similar to those that others have posted) I hardly think it warranted the BIG RED TYPE.
As for how the market is performing in the rest of the country … to the best of my knowledge Perth is still booming, I thought Brisbane was as well until I saw that article in the Courier Mail, Melbourne and Adelaide are kind of flat, and Sydney is off about 10%.
My point was that the market is slow in Sydney. Properties are taking a long time to sell and auction clearance rates are low. Its not “ticking along” as AUSPROP suggested. Does anyone know different?
…and I was about to say Sydney leads the market, but someone else has said that for me (must have been one of my many aliases)
Dimichie,
Now i understand !!! … you’re from the northern beaches !!! … i think the spit bridge should be open perminately.
Just kidding mate really i am – i meant half way.
resi
It warranted big red letters because your ‘doom and gloom’ stories relate to your area and are clearly an attempt to benefit yourself. Give it a rest.
I would enjoy discussing other topics with you but discussing economics with you is of no use to me. There is nothing for me to learn from you that I cannot get out of the most recent media articles.
I do things very differently to everyone else and I am not influenced by the media like it seems can so easily influence you.
[quote}…Perth is still booming, I thought Brisbane was as well until I saw that article in the Courier Mail, …[/quote}
I take it you will be doing a huge backflip on Brisbane now because of an article you read recently in one newspaper. If you look back through my posts, I have been advocating against buying in Brisbane for months and I did not need the media to tell me this. My information was based on common sense.
Your comments seem to also be changing from doom and gloom bubble bursting to flat and soft landing. Will we be in a boom next week if it says so in the newspaper?
Robert Bou-Hamdan
Mortgage AdviserYour comments seem to also be changing from doom and gloom bubble bursting to flat and soft landing.Not at all. I was making a comment on where I think the market is now. Never have I said the market has already crashed.
I believe there’s a good chance the market will crash and that low clearance rates etc could be a pre-cursor to that.
Will we be in a boom next week if it says so in the newspaper?Obviously not, because I haven’t changed my views despite the topic of this thread.
The article is rubbish.
This Graph from the ABS shows that the number of OO loans approved during March was nowhere near record levels. The average price is simply higher than December 2002 (well, d’uh!), so the total new finance commitment is larger. Does anybody have an ABS subscription? I’d love to see the non seasonally adjusted figures.
Also, can we see the origin of the article? Thanks.F.[cowboy2]
<edit> One more thing – does anybody care to do a basic TA on this chart?
<edit2>
Analysts said strong population growth, rising wage growth, sharply rising employment – and now tax cuts at the top end – are likely to keep home finance boomingAnonymous analysts? No journalist worth their salt would make such a claim without supporting it with a quote from an actual ‘analyst’. I’d guess Residex or HIA as the source if in fact there is one.
“As for how the market is performing in the rest of the country … to the best of my knowledge Perth is still booming, I thought Brisbane was as well until I saw that article in the Courier Mail, Melbourne and Adelaide are kind of flat, and Sydney is off about 10%.”
To say Perth is booming is probably sensationalism as well. It is just ticking along at typical 7 or 8% per annum growth. no bubbles, crashes or booms, just steady as she goes grwoth. The new housing market is admittedly tight but like with all markets that start to heat up – the price mechanism touches the brakes and pulls things back a little.
http://www.megainvestments.com.au
Extensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Doom and Gloom in brisbane.( say the papers)….thanks for the tip….I’ll be checking out Brisbane for a bargain then
“love the deal – like the property”
Just a thought, this could be just a dead cat bouncing.
Originally posted by The Mortgage Adviser:and I am not influenced by the media like it seems can so easily influence you.
Cough, paleez
Originally posted by The Mortgage Adviser:The ‘Northern Beaches’ is but a pimple on Sydney’s butt and I don’t think dmichie’s attendance at one or two auctions resulting in a 7% auction clearance rate could equate to a Sydney-wide Morgan Gallop pole.
Would take at bare minimum 14 properties to come to this number, not 1 to 2. That’s a small, but not insignificant sample size. If only one property in 14 sold, I would consider that an extremely negative harbinger.
N.B. I am not a dmichie alias, nor do I believe dmichie has any aliases. I think it might be taking things a little far, undermining a posters integrity. Doom and gloomers are people too [biggrin] and you might be surprised to find that negative opinions on the economy can be derived from logic and not simply pessimistic outlooks on life. Hell I even love Mondays [blush2]
I feel compelled to offer support to those that want to use these forums to express their views on property. Views that conflict with mine are really the only views that will contribute to my knowledge & awareness of property investing. It seems unfair to continually criticise a contibutor just because his/her ideas conflict! To argue and dispute these ideas is what is required. Sensible answers and replies that can be supported are the life blood of this forum.
‘Gloom & Doom’ may be an important message for some people especially while we have people coming on board with a fistful of dollars exclaiming..” I’m a newbie……”.
I must express some appreciation for the views of Dmitchie and the very sound comments from Foundation. It just does not make sense to blindly accept market predictions from those who sign their name ‘Vested interest mortgage broker” etc.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
