Housing finance figures released today show an unexpected increase in the number of mortgages approved in October.
Housing finance figures released today show an unexpected increase in the number of mortgages approved in October.

Shock housing market data released

DESPITE dire predictions this week of a looming collapse of the property market, which would trigger economic disaster, new figures show a lift in the number of recent homebuyers.

Housing finance data released today by the Australian Bureau of Statistics (ABS) has revealed an increase in both the number and total value of mortgages issued in October.

Throughout the month, 52,654 loans were approved, up 2.2 per cent on September, which experts say represents rare good news.

The figures also reveal that $30 billion in mortgages were written in October, representing a 2.6 per cent month-on-month increase, with owner-occupier loans accounting for $20.1 billion, up 3.5 per cent.

While investors remain nervous about the state of markets, the value of loans issued to them also rose a modest 0.6 per cent in October to $9.8 billion.

After a significant drop in median home prices in many capital cities over the past year, particularly Sydney and Melbourne, today's result is unexpected.

Mortgage Choice chief executive officer Susan Mitchell said it was a surprise rebound on September's finance data, which saw the weakest value of mortgages recorded in four years.

"In October we saw a welcome lift in the number and value of home loans approved," Ms Mitchell said.

"While the unexpected results could signal a reversal in the recent softening in approvals, it is important to consider the volatility in monthly data comparisons."

 

A lift in the number of mortgage approvals has come as a surprise, after dire predictions about the outlook for property. Picture: Tracey Nearmy
A lift in the number of mortgage approvals has come as a surprise, after dire predictions about the outlook for property. Picture: Tracey Nearmy

 

However, the ABS data shows the first increase in investment loan values since February, which could be a sign confidence is beginning to lift.

Sydney buyer's agent Nick Viner said he has seen a slight increase in the number of inquiries from investors over the past three months.

"I didn't hear from any potential new investors in the first six months of this year," Mr Viner, managing director of Buyers Domain, told news.com.au.

Mr Viner said the recorded lift in October of owner-occupier loans could indicate that buyers are starting to take advantage of lower prices - particularly first-timers.

"In some suburbs in Sydney, I'm actually seeing falls of 15 to 20 per cent. I think some buyers see this as an incredible opportunity to purchase their forever family home.

"Buyers are not in any rush and they don't need to be, but if they find a home that ticks all the boxes, they recognise it could be a once-in-a-lifetime opportunity to secure the right home (at a lower price)."

 

The value of owner-occupier loans approved in October was up 3.5 per cent on the previous month.
The value of owner-occupier loans approved in October was up 3.5 per cent on the previous month.

 

Mr Viner said the up-tick in housing finance was a surprise, given how cautious banks are being in assessing mortgage applications.

Whether the October result will be replicated in subsequent months is unclear.

"While October's data is encouraging, it remains to be seen whether demand for home loans will start to stabilise in the near-term," Ms Mitchell said.

On Monday, the Organisation for Economic Co-operation and Development (OECD) released an in-depth analysis of Australian property markets that painted a worrying picture.

It warned that on the "current trajectory", plans should be made to prepare for a "severe collapse" that could lead to an economic crisis.

 

The outlook for property in Australia has been all doom and gloom for most of 2018. Picture: AAP
The outlook for property in Australia has been all doom and gloom for most of 2018. Picture: AAP

The OECD report urged the Reserve Bank to begin lifting the official cash rate, which has remain unchanged at 1.5 per cent since August 2016.

CoreLogic data shows house prices in Sydney have slumped 9.5 per cent from their peak in July 2017, while median values in Melbourne have fallen 5.8 per cent from the peak in November 2017.

About 60 per cent of all property transactions take place in the two cities.

In October, AMP chief economist Shane Oliver downgraded his outlook for Sydney and Melbourne, saying he expected prices to collapse by up to 20 per cent in total.