Housing finance for December is out and it’s a beat on market expectations with the number of owner-occupied housing increasing 2.7% (2% expected) while the value for owner occupied housing surged 3.8% to $18.043 billion.
The data shows Australia’s love affair with property investment continues with the ABS reporting the value of investment housing loans surged 6%.
However, what will be worrying the RBA and APRA is the continued surge in the “buy to rent” market with investors driving borrowing to new highs.
Last week when it cut rates the RBA signaled, “the Bank is working with other regulators to assess and contain economic risks that may arise from the housing market.”
This data is somewhat historic, it’s December.
Since then the global monetary policy landscape has changed and the RBA has cut rates to an all-time low of 2.25%. It also signalled more cuts will be coming in the months ahead. This data both in total, and in the specifics of investment housing, will have the RBA worried that it might just have re-lit the fire under Australia’s housing market.
Indeed, Westpac Senior Economist Matthew Hassan wrote as a First Impression of the data that, Overall, the numbers suggest momentum is a touch stronger than expected, particular in investor segments. The RBA’s February rate cut should add to this although it will be several months before we get a definitive reading on the impact of lower rates on this measure.”
Together with the recovery in sentiment we saw this month in the Westpac Consumer sentiment index this data supports the view that the RBA will wait a few months before it decides whether to ease again.
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