Property Industry market wrap

Housing finance data released this week from the ABS showed that demand for housing finance fell during November 2009 by 5.6% for owner occupier home loans.

Falls in housing finance commitments for the construction of new homes (-6.5%), purchase of new homes (-5.1%) and established homes (-5.4%) also saw falls compared to the October 2009 results. Predictably, there was also a significant fall in first home buyer finance commitments which fell from 26% of all finance commitments during October 2009 to 22.1% in November 2009.

The one positive was the results for the value of investor finance commitments which increased to $6.3 billion during November 2009 the strongest result for investment finance since February 2008.

Overall the results suggest that the impact of two consecutive interest rate increases during October 2009 and November 2009 is having an impact on demand for home loans and given there is another increase to be felt in the December data and many expect rates to continue to increase it is likely to have a further dampening impact on demand for housing loans, particularly for first home buyers.