The housing finance sector continued to show signs of a slow recovery in March with a 1.2% rise in dwelling finance commitments, according to the latest figures from Australian Bureau of Statistics.
The sector had earlier defied gloomy forecasts in February with a surprise jump of 1.1% in dwelling finance approvals.
According to the ABS, the $19.135 billion worth of dwellings were approved in the month of March.
The investment housing sector led the charge with a 2.5% increase in finance commitments, following a 1.7% increase in February 2005.
The investment sector was driven primarily by a large increase in the volatile construction of dwellings for rent or resale series up 14.3% or $100 million in March.
Meanwhile, the total value of owner occupied housing commitments rose by 0.6% or $84 million in March 2006, following a 2.4% rise in February 2006.
In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose from 17.8% in February 2006 to 18.4% in March 2006.
The recovery in March might be shortly, HIA’s executive director of housing and economics Simon Tennent said the current weak recovery in housing affordability is likely to be snuffed out following the interest rate rise earlier this month.
“Higher interest rates at this stage of the new building cycle will be a major blow for Australia’s new home builders, materials manufacturers and suppliers.
“The housing industry is just recovering from a lengthy downturn in activity and this rise will serve little purpose other than undermining confidence within the industry and unnecessarily punishing mortgagees,” Tennent said.
The average loan size for owner occupied housing commitments increased in March 2006 to $219,600.
Increases were recorded for purchase of established dwellings excluding refinancing up 2.7% or $211 million and the purchase of new dwellings up by 2.3% or $16 million.
The only decreases were in refinancing of established dwellings sector, which was down 3.8% or $136 million and the construction of dwellings was down 0.7% or $7 million.
The number of owner occupied housing commitments increased in March 2006 compared with February 2006 in New South Wales (up 1072, 6.6%), the Australian Capital Territory (up 183, 31.1%) and Tasmania (up 17, 1.3%).
The Australian Capital Territory increased after a series of decreases beginning in December 2005.
Decreases were recorded in Victoria (down 423, -3.2%), Queensland (down 164, -1.3%), South Australia (down 73, -1.5%), Western Australia (down 61, -0.7%), and Northern Territory (down 30, -4.3%).
By Kathryn O’Meara
