Finance figures suggest real estate off to a positive start in 2011

The real estate industry had what looked to be some positive news last week with the release of housing finance figures from the Australian Bureau of Statistics.  The figures considered the level of finance commitments in November 2010, taking into account the different classes of borrowers as well as the varying purposes for seeking finance (e.g. purchase of a new home, construction of a home, etc). 

In what was a positive sign for the Australian real estate market, the figures showed a 2.5 per cent increase in the number of mortgages obtained by owner-occupiers in November 2010.  This was the largest monthly increase seen in the figures since May 2010. 

My colleagues and I at CENTURY 21 Australia are hopeful that such an increase may suggest that Australian home buyers are regaining confidence in the property market.  Last week, our Chairman and Owner, Charles Tarbey, said that the figures were pleasing and represent a gradual recovery in the housing market from the lows in issued mortgages that were seen in mid-2010.

In further good news, the ABS data also showed that finance for the construction of new dwellings rose 2.7 per cent, while new owner-occupied home finance grew by 9.7 per cent over the period.   

Understanding the true meaning of the figures may prove to be somewhat tricky due to the fact that the Reserve Bank raised interest rates in November, of which the total impact remains to be seen.  However, the data is still encouraging news for the housing industry and may indicate a strengthening demand amongst buyers. 

The only concerning aspect of the figures is the fact that there was only a slight increase in the number of first home buyer finance commitments (as a proportion of the total housing finance market) – rising from 15.4 per cent in October 2010 to 15.6 per cent in November 2010. 

It is becoming fairly clear that first-time property purchasers are feeling the impact of the rise in interest rates that we saw last year, along with the climbing prices of homes.    It may be time for governments throughout Australia to go back to the drawing board and consider the best ways to incentivise and encourage our citizens to purchase their first properties. 

With the exception of the first-home buyer figures, the ABS data represented some good news for real estate and its outlook for the coming year.  As I mentioned, we are mindful that the full impact of the November rate rise may yet to be realised, and as such will await the December 2010 data to get a better picture of what is likely to be in store for the year.   


Posted by Charles Tarbey on 24/01/2011 at 2:44 PM | Categories: Finance -


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