Housing finance figures reveal decline
(15 January 2010 – Australia) The latest housing and finance figures have revealed the pressure first home buyers have succumb to after three consecutive interest rate hikes.
The interest rate hikes coupled with the end of the government’s stimulus program for first home buyers has had a profound effect on the number of people gaining approval for new home loans.
There is now a shadow of doubt over whether the investment in new housing will lift Australia’s economic growth after, in one month, the number of approvals dropped by 6.2 percent.
However, the level of approvals is still higher than it was this time last year giving the government encouragement that the housing economy is tough enough to cope with the withdrawal of the first home-owners scheme.
ANZ’s acting chief economist, Warren Hogan, said that it is not yet known how much of an impact the three recent rate rises and the increased cost of funding from the banks will have on the underlying economy.
Mr Hogan also added that the Reserve Bank will have to wait several months to see how it plays out in the housing market, given that it is the most sensitive sector in the economy to interest rate movements.
Governor Wayne Swan said that anyone in the housing industry can attest to the fact that the government’s housing stimulus measures have been an undeniable success in boosting activity in the sector, so it is obvious that the withdrawal of those measures will have some impact.
Even so, it's encouraging that loans for new home constructions are the strongest since 1994, and loans to first-home buyers are still running very strongly at 2001 levels, Mr Swan highlighted.
There is now a shadow of doubt over whether the investment in new housing will lift Australia’s economic growth after, in one month, the number of approvals dropped by 6.2 percent.
However, the level of approvals is still higher than it was this time last year giving the government encouragement that the housing economy is tough enough to cope with the withdrawal of the first home-owners scheme.
ANZ’s acting chief economist, Warren Hogan, said that it is not yet known how much of an impact the three recent rate rises and the increased cost of funding from the banks will have on the underlying economy.
Mr Hogan also added that the Reserve Bank will have to wait several months to see how it plays out in the housing market, given that it is the most sensitive sector in the economy to interest rate movements.
Governor Wayne Swan said that anyone in the housing industry can attest to the fact that the government’s housing stimulus measures have been an undeniable success in boosting activity in the sector, so it is obvious that the withdrawal of those measures will have some impact.
Even so, it's encouraging that loans for new home constructions are the strongest since 1994, and loans to first-home buyers are still running very strongly at 2001 levels, Mr Swan highlighted.
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