Since late 2017/early 2018, a very clear downtrend has been evident in the monthly figures of both the number and value of home loan commitments. After the figures from February were released, some economists speculated the worst may have been over. The latest numbers have not ended the downtrend but more data will be required to paint a reliable picture given an unexpected federal election result and consequently, unexpected policy stability.
The ABS has released May’s housing finance commitment figures* and they were just a little more than expected. The total number of loan commitments to owner-occupiers remained unchanged after rounding, a higher result than the expected -1.0% and an improvement from April’s revised figure of -0.9%. However, on an annual basis, the growth rate further deteriorated from April’s revised figure of -11.4%, recording -12.4%. When “re-financings” are removed, the number of loan commitments fell by 0.1% over the month and by 15.0% when compared to commitments from May 2018.
ANZ economist Adelaide Timbrell said the timing of several public holidays and the Federal election needed to be taken into account. “The election in mid-May and the string of public holidays in April may have weighed on the result, as prospective buyers delayed their purchases to later in the year.” She also thought the election may have acted as a type of circuit breaker, reducing the relevance of pre-election results. “Given the shift in sentiment since the election, we doubt there will be much focus on this result.”
Other economists said much the same. Westpac senior economist Matthew Hassan said, “Overall, the update is of limited interest given the data pre-dates what looks to have been a meaningful shift in market conditions through June-July. The next few months of approvals data and the performance of auction markets as we head into the Spring selling season will be much more important.”