Even as housing approvals data confirmed a very strong 13.6% year-on-year growth for the year-ended July 2015, latest information demonstrated that the RBA’s strategy to reduce the risk of a bubble in the market are taking hold. Headline among the finance data was the declining proportion of loans to investors. Having hit a record 53.8% of all loans in May 2015, the July result saw investors receive 51.1% of all loans.
In July 2015, residential dwelling approvals amounted to 10,723 separate dwellings, the second highest monthly level recorded. The record remains the 10,908 dwellings approved a year earlier, in July 2014. There is, as the chart below shows, a seasonality to housing approvals. July is generally considered to be the last month a house can be approved if it is to be occupied before Christmas.
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The modestly lower approvals compared with a year before, may indicate the market is on the turn. Still, with year-end growth of 13.6% on a prior-comparative-period basis, the end of growth phase is probably still a few months off.
The nature of the boom and bust cycles in Australian residential dwellings – if it is always cyclical, of course – is complex and at times, difficult to comprehend. The drivers of it are equally complex and are a major part of Australia’s macro-economic outlook.
Over the course of the last year, a large part of the debate about the strength of the housing market has been focused on the role of investors, at least as compared with owner-occupiers. As the next item in Statistics Count shows, it’s a complex topic, with plenty of subtlety and nuance that make a single policy prescription difficult to identify.
