Housing finance data from the ABS for March 2011 released this week showed that owner occupier finance commitments continue to fall however, first home buyer and investor activity improved over the month. Total owner occupier finance commitments fell by -1.6% during the month to their lowest level since February 2001.
Looking at the components, refinances were down -3.0% and non-refinances fell by -0.9%. Year on year, total owner occupier finance commitments are -5.0% lower. As a proportion of total owner occupier finance commitments, first home buyers accounted for 16.0% of the market in March 2011 with 8,089 commitments. The 16.0% of the market was the greatest proportion since June 2010 however, in volume terms the number of finance commitments was actually higher as recently as December 2010 (8,515). The total value of investor finance commitments increased by 2.1% and investors accounted for 32.5% of the total value of all finance commitments. Over the month, the total value of housing finance commitments fell by -0.1% and it is -6.1% lower over the year.
Although housing finance was once again weak, lending finance actually improved over the month. Personal finance commitments increased by 0.5%, commercial finance commitments increased by 13.3% and lease finance commitments were up 10.5%. Total lending finance was up 7.7% for the month despite the weak housing results and is 4.8% higher compared to March 2010.
Westpac and the Melbourne Institute released the results of their monthly Consumer Sentiment survey this week. The Consumer Sentiment index was recorded at 103.9 points in May, down -1.3% from 105.3 points last month. The weak index result highlights that Australian consumers remain very cautious and are not overly convinced of the strength of the economy. Westpac have stated that sentiment has likely also fallen due to the RBA highlighting the potential for an interest rate increase in the near term.
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