Expectations of a strengthening housing sector have been helped by new figures showing a rise in the value of new home loan commitments to a two-year high, economists say.
However, some economists have cautioned that the gains were also boosted by first home buyers taking advantage of financing before the winding up of a stamp duty exemption scheme in NSW.
The number of new home loan commitments rose for the ninth month in a row in December following two consecutive interest rates cuts be the central bank.
The number of home loans approved in December rose by 2.3 per cent to 48,453, the Australian Bureau of Statistics (ABS) said on Monday.
Economists’ forecasts had centred on a 1.8 per cent rise for the month.
St George chief economist Besa Deda said the data pointed to a more solid housing finance recovery.
The ABS said that total housing finance by value rose 3.8 per cent in December, seasonally adjusted, to $21.262 billion, which was a two-year high.
“We saw value in the number of owner-occupier loans above expectation for December,” Ms Deda said.
“That continues to lend some credence to the theory that the housing market will see some stabilisation in the first half of this year.
“Housing lending has been in recovery since April,” she said.
“Initially, it was driven by refinancing activity, but now I think the roots are more stable.”
Ms Deda said that global factors may keep the construction and building approvals sectors quiet for some time.
“We haven’t seen a big flow-through from the recovery in housing lending flowing through to building approvals or residential construction,” she said.
JP Morgan economist Ben Jarman said the Reserve Bank of Australia’s (RBA) interest rate cuts after its board meetings in November and December have given the housing sector some support.
“We think this doesn’t really challenge our view,” he said.
“It’s just more of the same from the housing market. The RBA is giving a little bit of support but it is not enough to turn activity around,” he said.
NSW and Queensland had the strongest gains for new housing finance for December, which Mr Jarman said would have been helped by the winding up of state government assistance.
On January 1, the NSW government ended its first-home buyer stamp duty concessions for buyers of existing homes.
The Queensland government building boost grant to buy or build a new home was extended on April 30, 2012.
“You still get a sense that these numbers are probably being lifted a little bit coming in to the end of the year by some state-level subsidies that were coming to an end,” Mr Jarman said.
“So, with the stamp duty exemption in NSW, for example, there would have been a bit of a rush to get in there before those schemes wound off.
“So, it’s no surprise you saw first-home-buyer representation move up, the last few months of 2012 in particular,” Mr Jarman said.
