Extracted from: Sydney morning herald
Official figures show the owner occupied housing sector is holding up well, and won’t affect the outlook for interest rates, economists say.
The number of home loans approved in June rose minimally to 49,175, from 49,167 in May, the Australian Bureau of Statistics said today. Economists’ forecasts had centred on a 0.8 per cent rise in housing finance commitments for the month.
The ABS said total housing finance by value fell 1.4 per cent in June, seasonally adjusted, to $20.186 billion.
Advertisement: Story continues below ANZ economist David Cannington said the data showed the owner occupied housing sector was holding up fairly well. But he said it was a little worrying investment housing in value terms was down 4.4 per cent for the month.
‘‘So it looks like investors were taking a bit of a rest in June and owner occupied housing was holding up this number,’’ Mr Cannington said. ‘‘Obviously house prices have been flat to negative and that hasn’t encouraged investors to enter the market.’’
He said he didn’t expect the data to change the central bank’s outlook on monetary policy.
‘‘I think the Reserve Bank have got a few other things that are taking priority over this data.
‘‘Our view is that rates are going to stay on hold for the moment, and the RBA will just have a look at how this financial markets volatility works out before they make their next move.’’
The Reserve Bank of Australia (RBA) has kept the cash rate at 4.75 per cent since November last year.
Royal Bank of Scotland senior economist Felicity Emmett said the housing market had looked as if it was starting to recover, but June showed that was not the case.
‘‘Confidence issues are impacting, so people are unwilling to borrow,’’ she said. ‘‘Rates are at a restrictive level, so people are not feeling confident about getting big new houses.’’
She added the backdrop of plunging global equity markets was going to stop the central bank from considering any more rate rises.
‘‘They’re going to be watching for how it will flow through the financial markets,’’ she said.
JPMorgan interest rate strategist Sally Auld said the bond market didn’t care about the housing finance numbers, given everything else that was going on in world markets.
‘‘The market cares nothing about housing finance numbers,’’ she said. ‘‘The move on equity markets is driving the response on bond markets.
‘‘People just don’t know what will happen next.’’