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SYDNEY, Feb 11 AAP

February 11 2013, 1:14PM

A recent pickup in housing loan approvals has gone into reverse, suggesting a series of interest rate cuts is taking its own sweet time in percolating through the economy.

The latest seasonally adjusted figures from the Australian Bureau of Statistics (ABS), released on Monday, showed the number of home loans approved in December was down by 1.5 per cent from November.

It was the third monthly fall in a row.

In dollar terms, home loan approvals were down by 2.7 per cent while loans approved for investors dropped by 2.4 per cent, leaving the December total down by 2.6 per cent from November and up by only 0.2 per cent from a year earlier.

The value of loans approvals had risen strongly in September and October, led by a surge in investor loans which ebbed in November and December.

It is hard to ascribe the now-fading blip in loan approvals to any underlying economic trends.

More likely, it was driven by an increase in supply evident in an upsurge in approvals to build multi-unit residential projects through the middle months of 2012, after a lull from late 2011, which subsequently came onto the market either for immediate or "off-the-plan" sales.

Approvals for multi-unit dwellings are still elevated - the December level was 20 per cent above the average for the previous decade.

But approvals for free-standing houses, still the bulk of the new housing market, were 17 per cent below average, leaving total building approvals four per cent below par and showing no real sign of a new upsurge.

It may be that the latest round of apartment-building pays off for developers, prompting another upsurge in approvals and, subsequently, lending to homebuyers and investors as the dwellings come onto the market.

But for the time being, the indications are that the series of interest rate cuts beginning in late 2011 has not gained as much traction as it seemed to have a few months ago.

That's consistent with the policy of the Reserve Bank of Australia (RBA) to leave the door open for another interest rate cut or two if necessary to give the economy a boost.

But there is still a lot of uncertainty over how much residual impact of those earlier rate cuts is still the flow through.

And that is consistent with the RBA's decision to put off walking through the door it's left open pending further evidence that a move is needed.

By Garry Shilson-Josling, AAP Economist