Housing finance rises more than expected

The number of home loans taken out climbed 1.8 per cent in August to reach the highest level since January.

The Bureau of Statistics figures show 45,821 home loans were taken out in August, with a total value of around $13.65 billion, in seasonally adjusted terms.

Economists had generally expected growth of around 1.5 per cent in the number of loans being taken out.

Excluding refinancing, the number of new loans taken out was up 0.6 per cent.

In a positive sign for the struggling construction industry, the number of loans for the purchase of a new dwelling rose 13.9 per cent to 2,341 - the highest reading since September 2009.

However, the number of loans for the construction of dwellings was up just 0.2 per cent.

The value of loans going to investors dipped 0.8 per cent to $6.65 billion, with the $278 million approved for the construction of new dwellings for rent and resale the lowest figure in 11 years.

The proportion of first home buyers in the market also dipped slightly from 19.2 to 18.6 per cent.

However, Westpac's economics team expects more first home buyers to be lured into the market by lower interest rates.

"A modest upward trend in housing finance to owner-occupiers is now apparent.

New lending trended 1.2 per cent higher in August, a turnaround from modest trend declines over the first five months of the year," they observed in a note on the data.

"A greater number of first home buyers are likely to enter the market over coming months, in what is the "spring season", encouraged by improved housing affordability underpinned by lower interest rates." The chief economist at Master Builders Australia, Peter Jones, is also hopeful that the market for new homes has bottomed and will continue rebounding.

"The positive trend that has emerged in the housing finance figures is a very welcome sign, but does not herald a recovery for the sector just yet," he noted.

"The figures reveal that housing finance may have found its floor which is encouraging, but also shows that any recovery will be coming from an extremely low base."

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