Australians took out more mortgages than analysts expected in June, with the latest ABS figures reflecting a 2.7% month-on-month gain versus a market forecast of 2%.
The number of mortgages grew 1% in NSW, 1.9% in Victoria, 4.4% in Queensland and 2.8% in SA, while mortgages in the mining-heavy WA fell 1.6%.
UBS economists Scott Haslem and George Tharenou note that mortgage values are now at the highest level since 2009, the number of first home buyers is increasing and the housing market is likely to continue growing strong:
Overall, while home lending only edged up m/m in June, the trend clearly remains strong, while the moderate pick-up in construction loans and first home buyers is also encouraging.
With house prices also accelerating (which is increasing household wealth), housing remains the strongest part of the economy.
With August’s 25bp RBA rate cut still to ‘come down the pipe’, housing is likely to strengthen further ahead, albeit this is needed to help to rebalance the economy, given a run of weaker domestic data (like the flat trend in retail sales).
Westpac senior economist Matthew Hassan said today’s data was positive but warned that some figures should be treated carefully, suggesting that a 7% gain in Victorian first home buying could be linked to new state government program.
Meanwhile, UBS’ Johnathan Mott has warned that record-low interest rates may have set the scene for a potentially dangerous surge in house prices – particularly in Sydney.
There’s also data out today that shows that although the construction industry is still contracting, but at the slowest rate since February.