An increased flow of credit into the housing sector, apparently due to a last minute rush by first home buyers to secure the full benefit of a more generous housing grant, looks likely to generate a boost to the economy.
An increased flow of credit into the housing sector, apparently due to a last minute rush by first home buyers to secure the full benefit of a more generous housing grant, looks likely to generate a boost to the economy.
The number of housing loans to intending owner-occupiers rose by 5.1 per cent in seasonally adjusted terms in September, ending two months of slowing demand, the Australian Bureau of Statistics (ABS) said on Monday.
That followed a fall of 1.9 per cent in August.
Economists' forecasts had centred on a three per cent rise for September.
In value terms, the increase was 6.7 per cent in September, after a 2.7 per cent fall.
The value of loans to investors edged back by 0.1 per cent in September, but the came after a jump of 8.3 per cent in August.
Overall, the value of lending for housing was up by 4.8 per cent between August and September, and 35.4 per cent from the low point in September last year.
The proportion of home loans granted to first time buyers was 26.1 per cent in September, up from 24.7 per cent in August. However, it remained below the record 28.5 per cent peak set in May.
From October 1, the federal government's increased first home owners grant was cut to $10,500 from $14,000 for established homes and to $14,000 from $21,000 for new properties.
The grant returns to its original $7,000 for both categories from January 1 next year.
In dollar terms, lending in September was running at $23.847 billion per month, an increase of $1.097 billion from August and $6.231 billion from September 2008.
The most notable rise with the total has been in categories identified by the ABS as relating to new housing, either newly built, or yet to be constructed.
In September, the total amount of lending in these categories was at a record high of $3.027 billion in September, a rise of $228 million or 8.2 per cent from August and $1.162 billion or 62.5 per cent from a year before.
This will add to economic growth in the quarter or two ahead.
It will be evidence that the economy is gaining momentum and, for the Reserve Bank of Australia (RBA) and will provide support to the case for the rises in interest rates in the past two months and those yet to come.
The strength in lending for housing will most likely put upward pressure on housing prices, which have already risen over the past year, by 6.2 per cent according to ABS data released earlier this month.
The RBA has already begun to disclaim responsibility for those price rises, repeatedly highlighting in speeches and reports the role of high development costs and restricted supply of land, rather than excessively stimulatory monetary policy.
Even so, the vigour in the housing sector will make the RBA more confident in its program to kick the low interest rate supports out from under the economy.