Australian Bureau of Statistics data shows loan approvals for owner occupiers was subdued in June. Lending was flat for the month, with just over 49,000 mortgages issued. Over the first half of the year, new lending to owner-occupiers dropped 6 per cent. New lending increased by 1.3 per cent, but finance for the construction of new dwellings fell by 0.8 per cent in June. Economists are predicting housing activity will be a drag on growth this year, with falling house prices keeping buyers away. Deepening household caution is undermining the willingness to take on debt.
And the Australian Finance Group, this country's largest mortgage broker has revealed that mortgage sales declined by 3.7 per cent in July. Consumers remain fearful about the threat of further rate hikes, taxes and global economic worries says AFG. Mark Hewitt, the group's General Manager said Western Australia, supposedly the prime beneficiary of the resources boom has a particularly depressed property market.
A survey by property consultants Metropole has found 59 per cent of home buyers and investors plan to buy an investment property in the next year. That's a drop of 5 per cent from earlier in the year. More than two thousand people were surveyed and tighter access to finance was revealed as their number one worry. Economic uncertainty and negative cash flow were also areas of concern. 28 per cent of those surveyed believe Sydney will show the best capital growth over the next two years.
The Reserve Bank of Australia statement on Monetary Policy re-iterated that the housing market has recently slumped, saying homes are relatively affordable and arrears are still low by international standards. Demand for housing finance has slowed, the bank noted, with house prices falling 2 per cent over the year. Investment in new dwellings has fallen below the average level of the past twenty years, and this was pushing up rents, especially in Sydney.
On that note, The NSW government's Rent and Sales Report has revealed Sydney rents increased by $10 to $440 over the June quarter. The steepest increase was for apartments in the inner city. The median rent increased by $20 to $540 in the inner ring. Rents for three bedroom detached houses have remained flat while two bedroom apartments have steadily risen.
And keeping the focus on Sydney, real estate firm Savills says houses there are good value, with one of the lowest house price growth rates among ten world class cities. Savills placed Sydney among five old world economies including London, Paris, New York and Tokyo, where residential values have risen by an average of 32 per cent since the end of 2005. The average growth has been much steeper among the five new world economies of Hong Kong, Moscow, Mumbai, Singapore and Shanghai, which grew 123 per cent.
Moving further south, and the volume of house sales in Tasmania fell 10.2 per cent in the June quarter. The Real Estate Institute of Tasmania reports that house prices have remained steady.
