Australian Property News

Finance for housing increases

Posted on Monday, January 17 2011 at 10:14 AM

Housing finance to owner-occupiers was strong in November, rising 2.5 per cent.

The Westpac Group says previous months had shown approvals starting to form a base, after slumping 30 per cent in the nine months to June, 2010.

"That drop reflected the earlier rapid re-tightening in rates and a sharp wind-back in first homebuyer activity," the Westpac Group says.

"The November report shows demand was doing more than just stabilising, it was starting to firm again."

Loans to first homebuyers also increased in November, and approvals for the purchase of new dwellings jumped 9.7 per cent.

"The only weak spot was investors, where the value of lending fell 2.3 per cent. Non-bank lenders accounted for all of the November rise, with a 35 per cent surge in three months."

The Westpac Group says November's interest rate rises will still impact on finance approvals, with a fall in December now set to be followed by a significant hit from Queensland's flood disaster in January to February.

"The state as a whole accounts for 20 per cent of all finance approvals. That said, this will be a temporary shock with a subsequent rebound as delayed projects come through."

The Westpac Group says interest rates will be a more enduring restraint, but the factors behind the market's resilience late last year - strong labour markets, rising household incomes, solid population growth and significant pent-up demand for housing - will remain in effect in 2011.