Home loan approvals in Australia have increased, as home buyers are confident that interest rates will stagnate or decline in the coming months.
Data from the Australian Bureau of Statistics revealed that the number of home loans granted in August climbed 1.2 percent to 50,965, marking the fifth consecutive month that housing finance commitments have been on the uptrend. Additionally, the total housing finance presented to prospective home buyers edged up one percent to a seasonally adjusted S$20.8 billion.
Several economists noted that the country’s housing market was boosted by growing sentiment that the Reserve Bank was not concerned about inflation and would not increase the current 4.75 percent interest rate until mid-2012.
Australia’s central bank has yet to raise the cash rate since Melbourne Cup Day in 2010, while Westpac and ANZ are now expecting a 25 basis point reduction before Christmas.
Josh Williamson, an economist at Citigroup, said the housing finance trend suggests that mild dips in house prices will abate.
“This could reflect the stability in interest rates this year,” he said.
JP Morgan added that it could be the beginning of a “mini-rally” but not a property boom.
“In our view, the RBA have little appetite for cutting rates as the data currently stands,” said Ben Jarman, economist at JP Morgan.
To contact the journalist, you may send your message to editor@propertyguru.com.sg