Private housing finance increases

[Jovial Monk]

First-home buyers revitalise the market

* Tim Colebatch
* February 16, 2009

AUCTION clearance rates have rebounded in Melbourne, Sydney and Canberra, confirming signs that the Federal Government's short-term lift in the first-home buyer's grant has kicked the sector back into life.

A week after the Bureau of Statistics reported that loans to first-home buyers surged in December, auction clearance rates on the first weekend of the 2009 season were 70 to 75 per cent in all three cities, up from barely 50 per cent late last year.

Industry sources say the rebound is due to falling interest rates and the Government's decision to treble temporarily the first-home buyer's grant for new housing, and double it for existing homes.

The bureau's figures showed almost 40 per cent of all people taking out loans to buy a home in December were first-home buyers. Stockland managing director Matthew Quinn said last week 65 per cent of Stockland customers were now first-home buyers.

Apart from providing for an orderly retreat in house prices (Adelaide will follow the trend soon enough and the reported continuing increase in house prices could be due to the way property sales are recorded, trust me on this I was involved with this for 24 years!) the house building will provide jobs for those in the building and whitegoods and carpet industries. Even when people buy an existing house they will spend money on repainting, renovating etc and changing stuff in the garden, so lots of multiplier effects!

[Postul8]

The spike in new home loan approvals, supposedly put down to first time buyers, is just that. An aberration. If the artificially boosted FHOG was hanging around after June, then we really might see something resembling a recovery occur in the housing market, but it's not. Banks are also slowing the processes by not servicing applications they're getting. Both CBA and WBC are reporting service responses in weeks, not days. It's their own fault, of course. Major banks have successfully driven non-bank lenders out of the marketplace. I don't take any statistics reflecting changes in economic fortunes seriously at the moment. We have a long, long road to travel yet.