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The Westpac Analyst, Matthew Hassan, notes that the July housing finance approvals were stronger than expected, the number of owner occupier loans rising 4.2% vs the consensus forecast of a 1.5% gain. Approvals are still down -8.7%yr.

Key Quotes:

“The value of investor loans also posted a strong 5.3% gain in the month, but is still down -20.4%yr.

The total value of owner occupier and investor loans rose 5.1%mth, -11.8%yr.

While the July data came in above expectations, the surprise relates more to the timing of the lift for the finance data rather than the market upturn itself which more timely indicators show gathered clear momentum in August after having stabilised in June-July.

Industry data covering the major banks had pointed to a more modest gain for finance in July suggesting this strength would show through more clearly next month. Instead the gain looks to have come through a month earlier, the solid July rise also suggesting non-majors may be seeing a bigger lift in finance.

Overall, while the July gain was stronger than expected it is broadly consistent with the improvement in auction market activity and prices seen through Jun-Aug. While conditions point to a further rise in August, turnover still looks to be running at low levels.

Finance data in the next few months will provide important clues to the composition and strength of the upturn.”