Housing finance shows little response to rate cuts

Real Estate Institute of Australia (REIA) President, Ms Pamela Bennett says the June housing figures released by the Australian Bureau of Statistics (ABS) show there’s been little response to the interest rate cuts of May and June.

Housing finance figures for June 2012 show, in trend terms, that the number of finance commitments has declined by 0.1 per cent, making this is the sixth consecutive month of decreases.

“In trend terms, increases were recorded in Western Australia, Victoria, Tasmania, South Australia and the ACT. All other states and territories recorded decreases. The largest decrease in New South Wales (down 1.4 per cent in trend terms) while the largest increase was in Tasmania (up 1.9 per cent in trend terms),” said Ms Bennett.

“Increases were evident for the construction of new dwellings (up 0.7 per cent in trend terms) and the number of commitments for the purchase of new dwellings (up 2.4 per cent in trend terms). The commitments for the purchase of established dwellings fell by 0.3 per cent (in trend terms),” she continued.

The number of first home buyers, as a percentage of total owner occupied housing commitments, increased to 18.3 per cent in June 2012 compared to 17.8 per cent in May 2012. The long-run average proportion is 20.2 per cent.

The value of investment housing commitments fell by 0.4 per cent, in trend terms in June, the fourth consecutive month that it has declined.

“These housing finance data indicate the RBA should have reduced interest rates yesterday as the market has not responded to the two previous cuts. The message for next month’s RBA meeting is abundantly clear,” Ms Bennett concluded.