Garry Shilson-Josling, AAP Economist
(Australian Associated Press)
Loans for investment in new housing have jumped by 54 per cent to a new record high.
The value of lending to investors in new housing construction surged from February’s $1.186 billion – itself a record high – by $642 million to $1.828 billion in March.
The extraordinary surge in loans to investors for new housing was largely offset by falls in lending to investors for already-built homes and to owner-occupiers.
The net result of all this was a slight fall in the total value of housing loans approved to $32.74 billion in March from $32.81 billion in February, according to seasonally adjusted data from the Australian Bureau of Statistics on Wednesday.
It’s conceivable that the pattern of lending in March may be at least in part a knee-jerk response to the federal opposition’s policy of phasing out the negative gearing tax break on existing homes from mid-2017.
The Australian Labor Party raised the issue in mid-February and it has been in the news ever since.
But the timing seems a bit tight – housing loans can’t be organised at the drop of a hat.
And it would not necessarily be a rational response, with over a year to get in before the cut-off.
Alternatively, the surge in construction loans to investors loans could be just another example of the `lumpiness’ of a data series increasingly dominated by the timing of large, multi-dwelling apartment projects.
Either way, there is a lot more money heading the way of the housing construction industry, so it augurs well for the economy.
It suggests fears that the housing sector has hit the wall and may drag on the economy later this year are overblown.
And, importantly, the figures apply to the time before the Reserve Bank of Australia’s interest rate hike last week.
So the housing sector, already doing surprisingly well according to Wednesday’s data, will be getting a further boost through the winter.