Australia home loan growth weakest on record despite heavy discounting
By Swati Pandey
SYDNEY, Feb 28 (Reuters) - Australian home loans rose at
their slowest monthly pace in more than four years in January
with the annual rate the weakest on record as credit tightening
by banks and a sharp fall in housing prices turn off demand.
Data from the Reserve Bank of Australia (RBA) on Thursday
showed housing credit rose 0.2 percent in January from the
previous month, the slowest increase since October 2015. The
annual pace clocked at 4.4 percent.
Separate data from property consultant CoreLogic showed
vendors were offering large discounts on their original asking
prices in a bid to sell their property, with Sydney seeing more
substantial reductions than during the 2008 financial crisis.
The figures bolster views that a sharp downturn in
Australia's once-booming housing market has still further to run
in a major headwind for consumer spending and economic growth.
The slowdown has also become a "significant uncertainty" for
Australia's central bank which cut forecasts for economic growth
and inflation earlier this month while opening the door for
further policy easing.
"With housing market conditions continuing to deteriorate,
buyers thin on the ground and a high volume of stock listed for
sale, it is reasonable to expect that over the coming months
vendor discounting may increase further," said CoreLogic analyst
That suggests prices will drop further even though auction
activity in February bounced across the country with volumes
surging the most since the start of the year.
The median vendor discount in Sydney is currently at 7.5
percent from 4.8 percent a year ago and the largest since
February 2006. In Melbourne, vendor discounting at 7.0 percent
is the biggest on record, CoreLogic data showed.
"This highlights just how weak housing market conditions are
and how few buyers there are," Kusher said.
Home prices had broadly doubled in the major markets of
Sydney and Melbourne in the five years to late-2017 and have
since fallen more than 8 percent.
The RBA has called the current correction "inevitable" but
"orderly" saying it will improve housing affordability and put
the country's housing market on a stronger footing.
Still, an increasing number of economists are now tipping
cuts to the official cash rate with Australia's No.2 lender
Westpac becoming the first of the country's major banks to call
for further policy easing this year.
(Reporting by Swati Pandey;
Editing by Shri Navaratnam)
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