Australia’s property market has started 2016 in better shape, and a bump in investor home loans isn’t expected worry the Reserve Bank.
The number of home loans approved in February rose 1.5 per cent, showing that demand for housing is still reasonably solid despite the market cooling.
The value of approved investor loans rose sharply, by 4.1 per cent, taking this group’s share of the total to 36 per cent.
But this isn’t strong enough to cause the Reserve Bank any headaches, JP Morgan economist Tom Kennedy said.
“While above the historical long-run average, the current composition is not drastically different to that during the 2000s,” he said.
“(And it’s) comfortably below the 2014-15 boom period where investor loan shares consistently ran above 40 per cent.”
Meanwhile, first-home buyer activity had slipped to a decade low, Mr Kennedy said.
“The share of loans to first-home buyers fell to 14.7 per cent, the lowest print since the mid-2000s,” he said.
“It is hard to see this share falling much further.”
ANZ senior economist David Cannington says February’s result confirms more timely indicators like house prices and auction clearance rates, which are looking healthier.
“Sales market activity definitely has improved in recent months compared with the end of 2015, but the improvement has been quite tentative,” he said.
Mr Cannington expects sales activity to remain timid for several months, and weak growth in housing construction through 2016.
“Some of the increases in mortgage rates and the impact of tighter regulation, particularly on investor sales activity, are creating some headwinds,” he said.
ANZ predicts the central bank’s cash rate will remain on hold at a record low of two per cent for the rest of 2016.
The value of total housing finance was up 2.6 per cent in February, seasonally adjusted data from the Australian Bureau of Statistics show.
Loans approved for owner-occupied housing, based on their value, rose 1.7 per cent in the month.