RP Data Market Update 14 Feb

Housing finance data for December 2013 was released earlier this week by the Australian Bureau of Statistics (ABS). The number of owner occupier housing finance commitments fell by -1.9% over the month however, year-on-year commitments are 14.1% higher.Owner occupier finance commitments consist of refinances and non-refinances (or new loans), refinances were -3.7% lower over the month but 12.5% higher year-on-year. New loans were -1.0% lower over the month but 14.8% higher year-on-year.

Looking at the total value of housing finance commitments in December 2013 there was a record $27 billion committed to. Owner occupier commitments (excluding refinances) were -1.0% lower over the month, owner occupier refinances were -2.9% lower and investment commitments were 2.9% lower. Year-on-year, each segment has recorded a lift with owner occupier commitments (excluding refinances) up 19.0%, owner occupier refinance commitments are 20.4% higher and investment commitments are 40.7% higher. Investment mortgages in December accounted for 39.8% of all commitments which was the highest proportion since the record high of 41.2% in October 2003.

The number of first home buyer finance commitments fell by -3.1% in December 2013 but they are 1.9% higher year-on-year. Regardless of the year-on-year increase first home buyer activity levels are at near historic lows. As a proportion of all owner occupier finance commitments, first home buyers account for just 12.7% up from a record low of 12.3% in November 2013.

Westpac and the Melbourne Institute released the February results of their monthly Consumer Sentiment Survey this week. The Consumer Sentiment Index was recorded at 100.2 points meaning that pessimists and optimists are relatively evenly aligned. The Index fell by -3.0% over the month and is -7.5% lower year-on-year. Respondents to the survey were more optimistic about their family finances over the next year and that it was a good time to buy a household item; however they were more pessimistic about their family finances over the past year, economic conditions over the coming year and economic conditions over the next five years.

For the second auction week of 2014 there were 972 total auctions across the combined capital cities. The weighted average auction clearance rate was recorded at 68.2%. The auction clearance rate was higher than the 64.3% recorded over the previous week and the number of properties taken to auction was significantly up on the previous 457. Across Australia’s largest auction market, Melbourne, there were 335 auctions last week up from 104 the previous week. The auction clearance rate was recorded at 67.5% last week, down from 74.7% over the previous week. Sydney had 362 auctions last week and an auction clearance rate of 79.5%. The number of auctions was much up from 121 the previous week and clearance rates also rose from 75.0%. RP Data is currently tracking 1,517 capital city auctions over the current week.

Capital city auction clearance rates Week ending February 9, 2014

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Tim Lawless

Tim Lawless is the Research Director at CoreLogic Asia Pacific. Tim has been in the Australian housing market industry for more than 20 years with a focus on research.