Australian housing finance August 2015: Westpac's Matthew Hassan

GUEST OBSERVER

As expected, the August housing finance approvals data was the proverbial ‘dog’s breakfast’.

Changes associated with APRA's 'macroprudential' measures to contain investor housing activity created significant disruptions in the month.

These were expected to generate a large indirect boost to owner-occupier approvals with industry data pointing to a 7-8% boost in the month.

As it happened, the number of loans posted a more subdued 2.9% gain although the number of loans ex refi (+5.2%), the value of owner occupier loans (+6.1%) and the combined value of owner occupier and investor loans (+4.1%) all posted relatively strong monthly gains.

Policy-related disruptions combined with revisions due to changes in estimates of first home buyers and some banks reclassifying loans from investor to owner occupier.

The net effect lifted the Jul base for the number of owner occupier loans ex refi by 2.5% - as such the net gain vs previously published estimates was 7.7%, in line with Westpac’s 7.5% forecast.

The value of loans to investors showed a 0.4% dip in the month.

The total value of loans was up 3.5%mth and 4.1%mth ex refi with both measures up close to 20%yr.

This is the most reliable gauge of market momentum while policy-related disruptions are affecting the mix and indicates that, as at August, demand overall was still carrying solid momentum, above a 20% annual pace on a 6mth basis.

By state, the strongest gains for the were for NSW and Vic. The state detail on the value of investor loans is not released until next week, so total loan measures are not available

Details 
Owner–occupiers (no.)   2.9%mth, 8.8%yr  
– ex-financing (no.)     5.2%mth, 9.3%yr                     

Construction of dwellings (no.)    2.4%mth, -7.1%yr 
Purchase of newly built dwellings (no.)   2.6%mth, 2%yr 

Value of loans:             

Owner-occupiers ($bn)   6.1%mth, 26.5%yr   
Investors ($bn)              –0.4%mth, 12%yr         
Total ($bn)                    3.5%mth, 20.3%yr        
Total ex refi ($bn)          4.1%mth, 19%yr    

Matthew Hassan is senior economist with Westpac.