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Matthew Hassan, Research Analyst at Westpac, notes that Australian housing finance approvals were firmer than expected in May, the number of owner occupier loans rising 1.1% vs expectations of a 2% decline, and the value of investor loans up 0.1% in the month.

Key Quotes

“The result was against the wider ‘run of play’ for housing markets which has pointed to a further softening in recent months.”

“The number of new owner occupier approvals, i.e. excluding refinancing, rose 1.8% to be down 2.7%yr.”

“The number of construction-related owner occupier finance approvals also rose, up 0.8%mth, but down 5.2%yr.”

“The number of approvals to first home buyers (FHBs) rose 1.2%mth to be up 22%yr.”

“Overall, the May finance data is a little at odds with other housing market data that suggests conditions have weakened further through May-June, auction markets in particular. That was thought to be in response to tighter lending criteria. Again though, the May finance detail suggests little incremental change in lending conditions. Hopefully the next few months will clarify the situation. Until then we suspect the finance data is the ‘odd one out’.”