Housing Finance Falls, But Prices Remain Strong
By Louis Christopher on 13 Feb 2014
No Comments yet, your thoughts are very welcome
Quite a lot of real estate data has been released this week!
Let’s start with the ABS Housing Finance Approvals series. The one thing I find quite amusing is that there are so many different numbers in this series that almost anyone with a particular agenda can pull out a number that best suits them.
“At this stage I am not reading too much into this fall.”
In reality, the results for December were weak at the national level.
The total number of owner occupied housing finance commitments fell 1.9 per cent (seasonally adjusted).
Our preference is to look at the number excluding refinancing, which fell a more moderate 1.0 per cent.
Source: ABS
Interestingly, investor finance continued to rise with the value increasing by 2.9 per cent. Finance approvals for first home buyers fell again by 1.1 per cent.
Still no confirmation of any recovery for first home buyers.
Source: ABS
At this stage I am not reading too much into this fall. It is just one month’s worth of data at a time where seasonal volatility is at its highest (Xmas).
I do note though, that our asking prices index appears to be having a dip at the moment. Capital city asking prices are down 1 per cent for the past 3 days. Units are up by just 0.1 per cent.
Once again, January should not be overanalysed due to the holiday period. However, if our asking prices series still remains soft right throughout February, there might be a story.
Speaking of house price indexes, the ABS released its new dwelling price series today. What makes it so new? They now have an index on units as well as houses; plus a combined series. Previously it was just a house price series.
Overall, the results were very strong as expected. Residential property prices rose by 3.4 per cent for the quarter, and are now up by 9.3 per cent compared to December quarter 2012.
House prices were up by 3.5 per cent for the quarter, and are now up 9.5 per cent for the 12 month period.
Meanwhile, unit prices were up by 3.0 per cent for the quarter, and are now up by 8.8 per cent for the 12 month period.
“Residential property prices rose by 3.4 per cent for the quarter, and are now up by 9.3 per cent compared to December quarter 2012.”
Some of you may wonder what the weighting is for the combined dwelling series. You can find that here in the explanation. Overall, they are placing 74.1 per cent on houses and 25.9 per cent on units.
However, the weighting varies significantly between cities. It appears the weightings have been based on the 2011 census data.
The ABS also released the total value of dwelling stock, which they estimated to be just over five trillion dollars! To give you a comparison, the ASX states on their website that the total market capitalisation of Australian equities is 1.5 trillion dollars
It certainly gives you some perspective on the influence of the housing market upon the greater economy and why accurately measuring the direction of residential real estate prices is critical.
Next week, I’ll go into some detail on the comparisons of the various residential property indexes with a comparison of the results for the year.
