By Lucy Hughes Jones
(Australian Associated Press)
Uncertainty over the upcoming election is poised to keep a lid on housing market growth, despite help from fresh record low interest rates.
The March home loan approvals report was broadly in line with expectations, with steady owner occupier activity and a slight firming in the value of investor loans.
With the official interest rate slashed to 1.75 per cent last week and tipped to go lower, National Australia Bank economist Tapas Strickland says the property market may gain some support.
“But I don’t think it would ignite a surge in housing loan approvals,” he said.
Mr Strickland expects worries about the upcoming federal election to keep activity subdued for the next couple of months.
“There’s been many reports by real estate agents saying the number of buyers and sellers in the market has fallen away a little bit,” he said.
“People are holding off on that uncertainty over policy.”
The number of home loans approved in March fell 0.9 per cent, and the value of total housing finance was down 0.2 per cent, seasonally adjusted data from the Australian Bureau of Statistics show.
Loans approved for owner-occupied housing, based on their value, fell 1.2 per cent while approvals for investment housing were up 1.5 per cent.
Despite falling 13 per cent year on year, the tentative improvement in investor activity supports other indicators suggesting that the housing market is still in solid shape, ANZ economists said.
“Auction clearance rates remain stable at reasonable levels, and house prices are increasing, especially in the key Sydney and Melbourne markets,” they said.
ANZ expects the property market to remain cool this year, but an anticipated August Reserve Bank rate cut should provide further growth stimulus in the coming months.
The number of home loan refinancing transactions lifted sharply by eight per cent in March, CommSec chief equities economist Craig James said.
He said intense bank competition has encouraged home owners to shop around for the best rates on offer.
“No doubt the latest interest rate cut will spur another round of refinancing,” Mr James said.