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Housing finance reflects a flat market
Released 13 October 2010

Australian Bureau of Statistics (ABS) Housing Finance figures for August show, in trend terms, a slight increase of 0.3 per cent in the number of finance commitments for owner occupied homes compared to the previous month.  

“In trend terms, increases were recorded in New South Wales, South Australia, Victoria and Tasmania, with falls in all other states and territories,” said Real Estate Institute of Australia (REIA) President, David Airey.

The number of commitments for the purchase of established dwellings rose by 0.6 per cent in trend terms.

In seasonally adjusted terms, the number of commitments for established housing increased 1.4 per cent.

The number of first home buyers, as a percentage of total owner occupied housing commitments, fell from 15.9 per cent in July to 15.5 per cent in August – well below the long-run national average of 20.1 per cent and dramatically down from the 27.1 per cent level a little more than a year ago.

In trend terms, the value of investment housing commitments fell by 1.3 per cent compared to the previous month, following a fall of 1.2 per cent in July. On a seasonally adjusted basis, there was a 3.9 per cent decrease in August 2010.

“Investment housing had been the bright spark of housing finance earlier this year, however this is no longer the case,” Airey said.

“We are seeing the cumulative effect of six increases in official rates between October last year and May this year and concerns about further increases in the months ahead, particularly from first home buyers and investors” he continued.

“The message for the Reserve Bank is clear, the latest finance commitments confirm a flat housing sector with no further tightening of monetary policy necessary,” concluded Mr Airey.