Huge fall for home loan approvals

The number of home loans approved in March fell by 2.2%, according to the latest figures from the Australian Bureau of Statistics (ABS).

The value of properties also fell between February and March, for both owner occupied housing and investment housing.

In seasonally adjusted terms the total value of all dwellings fell by 4.4%. The value of investment housing fell by nearly 10% in the month.

The number of constructions approved also fell by 4.4%.

The numbers of home loan approvals have continued to fall over the past several months. Property experts at SQM Research say the pattern continued throughout April and is continuing still into May.

With housing demand falling, particularly in capital cities, this is expected to bring house prices down further across the country.

SQM Research recently adjusted its predictions on the house prices from back in October, after market evidence showed falling prices.

Despite an original estimate of an increase between 4% and 8% for Sydney house prices, SQM revised this to a fall as low as 4%. In Melbourne, it predicted they could fall by 3%, or grow by just 1% at best. The Victorian city was originally predicted to see an increase in house prices by as much as 12%.

SQM believes the recent lifting of the investor loan growth cap by the Australian Prudential Regulation Authority (APRA) is likely to have an initial muted impact upon the market.

In a statement, Louis Christopher said, “The evidence now suggests that action to reduce borrowings risks is now affecting the national housing market as a whole. This action, predominantly targeted at property investors, has triggered a decline in demand for residential property.

“It should also be noted that sales turnover has significantly slowed so far in 2018 and this will have negative ramifications for stamp duty receipts, particularly in NSW and Victoria.

“However it is stressed that SQM Research does not expect a general housing price crash to occur this year. The conditions required to create such a downturn are not in the housing market at present. The national economy is overall, healthy. Unemployment is relatively low and stable. Population growth is very strong. Oversupply of new real estate is only occurring in pockets.”

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