Housing Finance Commitments Up Strongly

[Shadow]

Housing finance commitments continue to rise strongly. The March data was released today.

http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/5609.0Mar 2009?OpenDocument

I have charted the trend below.

The recent uptick in housing finance commitments follows the sharp decline during 2008. History shows that this first uptick is always a precursor to an extended period of further growth. In all six of the previous six major housing finance downturn events over 34 years, the first uptick has been a precursor to an extended period of growth. We are now at number seven. This is a good sign for the property market.

Cheers,

Shadow.

 

[csc]

How you can come up with that statement is beyond me...

- Factor in the low rates currently on top of the artificially inflated support for FHBers that has never been offered before then come back to me and say the market is heading out of trouble..

All I can see mid term is further trending down.

Mid and high end properties are doing nothing in many areas.......the smart money is sitting on the sidelines in generally speaking.

Those sort of graphs are meaningless propaganda.

Im a bear at the moment, cant see any reason to be otherwise unless gems pop up.

good luck

 

[Shadow]

How you can come up with that statement is beyond me...

Your post is a little unclear. Which 'statement' do you not agree with?

Those sort of graphs are meaningless propaganda.

What do you mean by 'these sort' of graphs? What 'sort'?

The graph is simply a representation of the ABS data. Do you believe the ABS are responsible for 'propaganda'?

 

[topcropper]

The recent uptick in housing finance commitments follows the sharp decline during 2008. History shows that this first uptick is always a precursor to an extended period of further growth. In all six of the previous six major housing finance downturn events over 34 years, the first uptick has been a precursor to an extended period of growth. We are now at number seven. .

I'm trying to see these upticks and house booms, but it seems all over the place to me.

For example, the big 87 to 90 house price boom co-incides with a rise in the chart from 87 to midway into 88, then a big drop into 90. House prices on average almost doubled from 87 to 90.

The biggest rise of all on your chart is from 90 to 94, a terrible time for property prices in Australia and lots of places saw real price falls after inflation. Your chart shows much bigger housing commitments from 90 to 94, a flat period, then from say 97 to 03, a boom period.

I just can't see what your seeing here, but I'd like to.

See ya's.

 

[csc]

Your post is a little unclear. Which 'statement' do you not agree with?
your whole post



What do you mean by 'these sort' of graphs? What 'sort'?

The graph is simply a representation of the ABS data. Do you believe the ABS are responsible for 'propaganda'?

your making out in your post that recovery is on its way..i totally disagree, in fact its b/s..hope that clear enough..the figures you posted on that graph are meaningless, i cannot see any clear evidence of any turnaround at all unless im totally blind

 

[Shadow]

I'm trying to see these upticks and house booms, but it seems all over the place to me.

For example, the big 87 to 90 house price boom co-incides with a rise in the chart from 87 to midway into 88, then a big drop into 90. House prices on average almost doubled from 87 to 89.

The biggest rise of all on your chart is from 90 to 94, a terrible time for property prices in Australia and lots of places saw real price falls after inflation.

I just can't see what your seeing here, but I'd like to.

See ya's.

I didn't say anything about upticks coinciding with booms, however an increase in finance commitments does mean that demand for housing is increasing. Increased demand may lead to an increase in prices (with some lag of course). Similarly, a fall in demand, as seen during 2008, may lead to price falls or stagnation (again, with some lag).

Edit to add: When I say 'positive for the property market' in my first post, I am not saying there is a direct link between finance and house prices. I mean positive for the market in general - more sales, more business for banks, brokers, developers etc. Yes, national median prices happen to be rising as well right now, but that is a result of a combination of factors.

 

[keithj]

Shadow, I'm with TC. Show us the evidence on the graph. I think if extended housing growth was as simple as seeing an uptick in finance commitments then we'd all be rich market timers.

OTOH, housing has been trending up for most of the 34 years, so regardless of finance commitments there's always going to be growth just around the corner.

OT3rdH, increased housing finance commitments is one of the indicators that should be trending up before housing growth is likely, but it's by no means the only one.

OT4thH, which market will see housing growth? All of them, just Northern Beaches, or somewhere else ?

 

[Shadow]

your making out in your post that recovery is on its way..i totally disagree, in fact its b/s..hope that clear enough..the figures you posted on that graph are meaningless, i cannot see any clear evidence of any turnaround at all unless im totally blind

The recovery is not 'on its way'. It is already here. The APM, Residex and RPData statistics show national median house prices increasing during the March quarter 2009, and especially strongly during the months of February and March.

If finance commitments were 'meaningless' as you suggest, then why would the ABS waste their time producing these statistics every month?

Plenty of evidence exists for a turnaround... high auction clearance rates, rising prices and rising finance commitments for a start!

 

[Shadow]

Shadow, I'm with TC. Show us the evidence on the graph. I think if extended housing growth was as simple as seeing an uptick in finance commitments then we'd all be rich market timers.

OK, I see where the confusion is coming from. When I said 'extended growth' in my first post, I was referring to extended growth in finance commitments (not in house prices, although that is happening too).

If you look at the previous upticks in finance commitments, you don't see any occasions where there is an uptick followed immediately by another major downturn. All the upticks keep running for a long period of time - i.e. when the first uptick after a major downturn occurs, then housing finance growth keeps on growing, usually for several years, before the next major downturn.

Basically, what I am saying is that based on past history, this growth in finance commitments should keep running for some time. Which means demand for housing will continue to grow too.

Hope that makes more sense.

Cheers,

Shadow.

 

[freddie]

your making out in your post that recovery is on its way..i totally disagree, in fact its b/s..hope that clear enough..the figures you posted on that graph are meaningless, i cannot see any clear evidence of any turnaround at all unless im totally blind

Well, the figures have been provided today by the ABS. Some people, you may be one, appear to be under the impression that all the recent strong increase in housing finance/commitments is the result of the FHOG boost. That is false. Today's figures published by the ABS show the following:

- NON-FHB March commitments are up 22% from last September.

- NON-FHB average mortgage sizes for March are the highest they have ever been.

These figures show that the rises in activity are NOT limited to FHBs. NON-FHB activity is increasing strongly. Todays ABS figures also showed a growth in investor activity. Maybe you need to download the ABS data.

The figures are not "meaningless" - I think you just mean that they conflict with the view you are clinging to based on your gut-feel.

 

[Gremlin]

...but you then say "This is a good sign for the property market".

Yet, if I look at the housing finance stats from the ABS AND the house price stats, there's negligible correlation, regardless of lag. So, unless you have evidence otherwise, this is a false indicator for the property market (obviously not a false indicator for the finance market).

 

[Shadow]

...but you then say "This is a good sign for the property market".

Yet, if I look at the housing finance stats from the ABS AND the house price stats, there's negligible correlation, regardless of lag. So, unless you have evidence otherwise, this is a false indicator for the property market (obviously not a false indicator for the finance market).

You've really got to combine this with the other positive signs out there...

- House prices rising (as per Residex, APM and RPData)
- High auction clearance rates
- Westpac Melbourne Institute survey question 'is it a good time to buy a house' at highest reading for almost a decade
- AFG March 2009 home loan approval volumes (by number and value) were the highest on record
- Finance commitments rising strongly
- NON-FHB March commitments are up 22% from last September
- NON-FHB average mortgage sizes for March are the highest they have ever been

The signs are there. Discomforting for the bears, I realise.

Cheers,

Shadow.

 

[BoatBoy]

This message has been deleted by keithj. Reason: deleted

WTF ???

The post was ABS stats and acknowledgment of change of views from another source/forum.

I didn't mention what the source was or link to it, as to do that is against the rules here.

Why should that be deleted?

Dave

 

[keithj]

You've really got to combine this with the other positive signs out there...

- House prices rising (as per Residex, APM and RPData)
- High auction clearance rates
- Westpac Melbourne Institute survey question 'is it a good time to buy a house' at highest reading for almost a decade
- AFG March 2009 home loan approval volumes (by number and value) were the highest on record
- Finance commitments rising strongly
- NON-FHB March commitments are up 22% from last September
- NON-FHB average mortgage sizes for March are the highest they have ever been

The signs are there.

I agree that some of the leading indicators are pointing in the right direction (after 18 months of pointing down). I feel we need to see more indicators relating to the economy & business conditions turning positive rather than just housing/finance related indicators. I'd expect that would impact peoples confidence & wages sufficiently for them to feel able to spend more on housing.

 

[Gremlin]

You've really got to combine this with the other positive signs out there...

- House prices rising (as per Residex, APM and RPData)
- High auction clearance rates
- Westpac Melbourne Institute survey question 'is it a good time to buy a house' at highest reading for almost a decade
- AFG March 2009 home loan approval volumes (by number and value) were the highest on record
- Finance commitments rising strongly
- NON-FHB March commitments are up 22% from last September
- NON-FHB average mortgage sizes for March are the highest they have ever been

The signs are there. Discomforting for the bears, I realise.

Cheers,

Shadow.

I haven't raised any other signs, positive or negative, or queried them. Just that you've asserted that an uptick in housing finance commitments is a good sign for the property market. Yet the ABS data you quote doesn't support that since change in finance commitments is broadly uncorrelated with change in house prices at lag.

Given I own 14 IPs I have a substantial vested interest in your conclusions being correct. Doesn't mean that I can't spot bad analysis and be critical of it.

 

[Shadow]

Just that you've asserted that an uptick in housing finance commitments is a good sign for the property market.

Do you think it is a bad sign?

An uptick in finance commitments means the following...

- Increased demand for housing, which often leads to higher prices
- Increased revenue for banks and mortgage brokers
- More business for real estate agents
- More work for the residential construction industry

To me these seem to be positive for the property market. You disagree?

 

[rastus2]

Do you think it is a bad sign?

An uptick in finance commitments means the following...

- Increased demand for housing, which often leads to higher prices
- Increased revenue for banks and mortgage brokers
- More business for real estate agents
- More work for the residential construction industry

To me these seem to be positive for the property market. You disagree?

an uptick in the share market means:

UPTICK (noun)
The noun UPTICK has 1 sense:
1. a transaction in the stock market at a price above the price of the preceding transaction
Familiarity information: UPTICK used as a noun is very rare.


It does not mean it's time to buy because the next boom is on it's way.

an Uptick in an ECG means that there is still the potential for life in an almost deceased state.

An uptick in R/E means that all is not lost... it does not mean it's time to buy.

After all... it might just be a bull trap

 

[HiEquity]

After all... it might just be a bull trap

Or a bear trap! Which brings us to the conclusion that no-one knows what's going to happen. Someone's guess will be right but there is no way of knowing which guess that is. After all it's just a guess - the next black swan could be just around the corner - in either direction!

So best to hedge your bets by getting some exposure while the goings good and leave some room to spare in case the going gets better...

 

[csc]

all the markets i am looking at are not on the upturn..

FHBers are moving, no argument there at all BUT mid to high priced housing is r/s in most areas, there is little influx of genuine investors in the market.......

please tell me otherwise if im wrong cause im the first one to jump in on a proper rising market..it just isnt happening my friend in real life in most communities.........

the budget may support investors tonight, i dont know but even if that happns it will be quite some time before the market turns around...

just like share trading, its difficult to pick any bottom....way easy to sell into a rising market than chase a sale in a declining market....go ask any mug trying to sell quality property today....unless there is a huge discount on offer they just are not moving quickly at all, in fact many properties are still way overvalued..

smart money is on the fence and im happy to hang mine on the gate as well.

 

[boz]

Do you think it is a bad sign?

An uptick in finance commitments means the following...

- Increased demand for housing, which often leads to higher prices
- Increased revenue for banks and mortgage brokers
- More business for real estate agents
- More work for the residential construction industry

To me these seem to be positive for the property market. You disagree?

If you look at the data in particular the finance commitments increase is mainly for new homes

MARCH KEY FIGURES

--------------------------------------------------------------------------------
....................................... Trend .....Seasonally adjusted
Value of dwelling commitments(a) ....$m ...% change ..$m ...% change
Total dwellings ............................20 070 ...2.3 ..20 688 ....6.7
Owner occupied housing ...............15 251 ...3.4 ..15 731 ....7.3
Investment housing - fixed loans(b) .4 819 ..-1.0 ...4 957 ....4.7

Number of dwelling commitments(a) no. ....% change ..no. ..% change
Owner occupied housing .............58 797 ...2.8 ..59 793 ....4.9
Construction of dwellings .............5 150 ...5.3 ...5 565 ...13.9
Purchase of new dwellings ............2 539 ...4.3 ...2 610 ....8.8
Purchase of established dwellings. ..51 108 ...2.5 ..51 619 ....3.8

-----------------------------------------------------------------

It is definetly a good news for renters that would see less competition in the rental market and more unluckily to see undersupply of homes in the future.
May be also shadow is right and it is a good news for both home owner and renters and future home owners