Australian mortgage rebound a positive sign for home prices
By Swati Pandey
SYDNEY, April 9 (Reuters) - Australian home loans bounced
unexpectedly in February in a rare positive sign for the
country's subdued property market leading some economists to
speculate housing price falls may have found a bottom.
Home loans, a lead indicator for housing prices, gained 2
percent in February after falling for successive months since
October 2018. Most economists had expected either a small
rebound or decline in lending volumes. Loans to owner-occupiers
rose 3.4 percent in value terms, the first rise since October
and the largest since August 2015. Finance for first-home buyers
climbed 3.6 percent, the strongest since November 2017.
"It is early days, but the lift in lending in February is
encouraging," CommSec chief economist Craig James said.
Separate data out on Monday showed auction clearance rates
in Australia's two largest capital cities - Sydney and Melbourne
- held up around 50 percent last week. Although better than
2018, that is still a far cry from figures of above 70 percent
clocked during the boom time that ended in 2017.
Tuesday's data will be welcomed by the country's central
bank which is concerned steep house price falls could weigh on
spending by heavily indebted households. Falling home prices
could also weigh on construction activity, which would
eventually impact the business sector.
"Overall, the February update was firmer than expected,
consistent with the improved tone from auction market activity
and a slowing in price declines in recent months," said Westpac
economist Matthew Hassan.
"Some of the effects of tightening credit conditions may
also be dissipating," he added.
Australian banks, which heavily rely on mortgages to grow
their business, had heavily clawed back lending over the past
year as a powerful public inquiry unearthed a series of
malpractices forcing them to tighten lending standards.
"That said, the signs of improvement are still only
tentative. The market may be starting to find a base in terms of
finance activity but conditions remain weak overall," Hassan
House values across Sydney are forecast to tumble a further
9.3 percent in 2019 after 5.5 percent fall last year, according
to a CoreLogic-Moody's Analytics forecast published on Tuesday.
It predicted house values in Melbourne to decline sharply this
year, following a modest correction in 2018.
A property downturn is also likely to weigh on already tepid
inflation. Housing makes up over 20 percent of Australia's total
inflation basket which includes four broad categories - rents,
new dwelling purchases, utilities and maintenance and property
In light of these concerns, the Reserve Bank of Australia
(RBA) has brought the prospect of rate cuts back to the table
after keeping policy at a record low 1.50 percent since August
(Reporting by Swati Pandey; Editing by Sam Holmes)
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