Housing upbeat but job cuts hurt confidence in Oz

Falls of 0.3% in December and 0.4% in January suggest the upward trend has slowed and perhaps even halted. Photo / Thinkstock
Falls of 0.3% in December and 0.4% in January suggest the upward trend has slowed and perhaps even halted. Photo / Thinkstock

The flow of cash into the Australian housing market has slowed for the second month in a row.

But, at A$26.864 billion ($28.3 billion), the value of housing loan approvals in January was still 22 per cent higher than January last year, figures from the Australian Bureau of Statistics show.

That means an extra A$4.9 billion a month flowing into the market compared with a year ago.

Falls of 0.3 per cent in December and 0.4 per cent in January suggest the upward trend has slowed and perhaps even halted.

The latest building approvals figures show a 7 per cent rise in January.

That includes a 5 per cent rise in approvals for dwellings in multi-unit developments, which tend to generate loan approvals after the building has been completed rather than the other way around where free-standing houses are concerned.

So, there's a good chance a new peak in lending will be seen before too long.

Meanwhile, the surge in lending is having an impact on building. Despite a 2.8 per cent fall in January, the value of loans for new and to-be-built housing was up 15 per cent, or more than A$400 million a month, from January last year.

It's also notable that significant amounts of money - either cash or lent through offshore banks (including branches of Australian banks) - do not show up in these housing finance figures.

Other Australian data yesterday showed that huge job cuts by Qantas and car manufacturers shutting shop have helped pushed consumer confidence to its lowest level in 10 months.

The Westpac/Melbourne Institute index of consumer sentiment fell to 99.5 in March, from 100.2 in February, seasonally adjusted. A reading below 100 points indicates there are more pessimists than optimists about the economy.

Westpac senior economist Matthew Hassan said layoffs by some of Australia's biggest employers have hurt consumer confidence.

"The run of bad news around the motor vehicle industry, other manufacturers and Qantas has clearly rattled consumers," he said.

"Additional questions surveyed this month on news recall found over two thirds of consumers heard news on economic conditions with most viewing the news as negative."

The survey's unemployment expectations index rose 5.5 per cent in the month to 164.4, its highest level since the global financial crisis.

"The surge in the index reflects a severe loss of confidence around job security that can be expected to impact consumers' financial decisions," Hassan said.

Hassan said Westpac expects two more cash rate cuts by the Reserve Bank of Australia (RBA) in the second half of 2014.

The RBA next meets on April 1, and governor Glenn Stevens has indicated the cash rate won't be changed in the coming months.

"The ongoing downturn in mining; fiscal consolidation; a stubbornly high currency amidst a fall in the terms of trade combine with two important macro dynamics the RBA is presently choosing to understate," Hassan said.

The Westpac survey was con-ducted between March 3 and March 8.

- AAP

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