Market confidence: Home loans rise

The latest Bureau of Statistics data reveals the Sydney housing market remains subdued, although buyer activity has stabilised in the past few months with a sense of growing confidence in the marketplace.

The number of owner-occupied home loans taken out in June in NSW fell by 4.6 per cent compared with the previous month. Although the monthly number was down, this result was nonetheless encouraging, considering home loans rose strongly by 19 per cent during May, giving a net rise of 15 per cent in the two months.

The number of home loans taken out in the June quarter this year was 8.3 per cent higher than for the same period last year. The average value of home loans leapt to $325,300, the highest monthly figure on record.

The number of properties on the market remains higher than at the same time last year but the rate of growth of new listings is falling.

Interest rates should remain on hold for the rest of the year. However, the chance remains of an interest rate rise later this year, possibly in November, depending on the level of economic activity.

This week’s sharemarket rally is encouraging, indicating investor confidence in the underlying strength of the Australian economy. If this confidence holds up, this is unambiguously good news for the stability of housing markets.

The highest-priced house reported sold this week was at 549 Bourke Street in Surry Hills. The four-bedroom terrace sold for $2.01 million at auction through FNSpencer & Servi. A two-bedroom apartment with harbour views at 34/5 Milson Road, Cremorne Point, was the dearest apartment reported sold. McGrath Mosman handled the $1,285,000 auction sale.

Dr Andrew Wilson is the senior economist for the Fairfax-owned Australian Property Monitors.