Home loans grow as auctions hit record

Prashant Mehra
(Australian Associated Press)

Auction clearance rates in Australia’s major capital cities may not subside anytime soon, given the strong growth in housing loans that continues to fuel investor demand.

According to data released by the Australian Prudential Regulation Authority, total domestic housing loans in December jumped eight per cent to $1,493.5 billion.

New housing loans approved by lenders with more than $1 billion exposure crossed $101.0 billion during the December quarter alone, a rise of 3.9 per cent from the same month a year earlier.

The data follows a jump in auction clearance rates, particularly in Sydney and Melbourne.

A total of 3,232 housing auctions were held around the capital cities in the week to February 26, nearly 20 per cent higher than the 2,701 a year earlier, according to the latest figures from analytics firm CoreLogic. The results were driven by record numbers in Sydney and Melbourne.

The national preliminary clearance rate – for auctions ending in a sale – also hit a February record of 78.6 per cent, up from 71.4 per cent for the same week a year earlier, with successful auctions up in all capitals except Canberra and Perth.

“The strong capital gain conditions are likely to push the annual growth rate for Sydney close to the cyclical high of 18.4 per cent, which was recorded over the twelve month period ending July 2015,” CoreLogic’s head of research for Asia-Pacific Tim Lawless said.

The growth has come despite Australian banks tightening lending criteria for property investors over the last year, particularly for foreign investors, in response to APRA’s 10 per cent cap on lending growth in the investor market.

Australia’s banking regulator has also warned repeatedly that it will intervene if limits on lending growth are breached.

However, a record low of 1.5 per cent set by the Reserve Bank of Australia has continued to boost the housing market.

Last week, RBA governor Philip Lowe told the parliamentary economics committee that household debt is rising much faster than income and cutting interest rates further to boost growth now could be too “dangerous” for the economy in the longer term.

Sydney (81.5 per cent) and Melbourne (80.1 per cent) had the highest clearance rates for the week, while 77.3 per cent of homes auctioned in Canberra sold.

CAPITAL CITY MEDIAN HOUSING PRICES

HOUSES

Sydney – $850,000

Melbourne – $620,000

Canberra – $600,000

Darwin – $575,000

Perth – $510,000

Brisbane – $500, 000

Adelaide – $437,600

Hobart – $367,500


UNITS

Sydney – $717,000

Melbourne – $486,000

Perth – $422,500

Canberra $402,000

Darwin – $390,000

Brisbane – $385,000

Adelaide – $315,000

Hobart – $290,500

Source: Capital city private treaty sales, representing about 85 per cent of all dwelling sales across Australia. Data from CoreLogic Property Market Indicator Summary week ending February 26, 2017.

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