So when will the current boom in house prices, especially in Melbourne and Sydney end, after home lending fell for a 5th month in a row in February?
The fall in housing finance of 1.8% comes after the 3.3% fall in building approvals in February, which was also the fifth successive drop.
So the question is now, will the auction clearance rates of more than 70% in Sydney and Melbourne on recent Saturdays be where the downturn appears first?
Because there is going to be one: five months of falling lending will have an impact, it’s only a matter of time, especially after a very sharp revision in the January fall, downwards.
The number of home loans dropped 1.8% in February to 50,287.
January’s 2.3% drop was revised downward to a 7.3% slide. The market had forecast a 1% fall in February home lending.
That left the total number of home loans down more than 22% from the peak of 64,758 in June of last year.
In NSW the number of loans was off 27% in the same time.
Capital city home prices rose around 1.4% in February, compared with the 2% rise in January, according top figures from RP Data Rismark.
That small rise could be the start of a trend, or a one-off.
Certainly anecdotal reports from March tell of high clearances and a lot of houses being auctioned and sold.
But the Reserve Bank’s rate rises since last October and the jawboning from people like Governor, Glenn Stevens, on the dangers of a housing boom are taking their toll on investor and home buyer confidence.
As well banks are continuing to tighten their lending standards with higher deposits and lower Loan to Valuation ratios and more proof on income being required.
Investment loans fell 1.1% from a revised 0.9% rise in January, while the value of loans fell 4.4% to $14.08 billion, seasonally adjusted.
Home prices have increased 12.7% in the year to February, according to RP Data-Rismark, but that’s in the capital cities. Across the rest of Australia the rise was a more sedate 7%.
Only the number of loans for new dwellings rose in February to 0.7%, seasonally adjusted.
First-home buyers continued to decline as a percentage of all borrowings, dropping to 18.1% in February from 20.5% in January.
