With rate cut mania now possessing the market’s collective brain, today’s housing finance figures are old hat, even if they paint a picture of an industry in near freefall.

The Australian Bureau of Statistics said the total value of dwelling finance commitments excluding alterations and additions fell 0.9% in June, compared to May in seasonally adjusted terms.

The ABS said owner occupied housing commitments fell 1.1% and investment housing commitments were 0.3% lower.

Compared to the car industry, which continues to show some growth despite high interest rates and oil and petrol prices, the collapse in the housing sector is astonishing.

The one thing you could say about the housing sector is that its now at recession levels, so the bottom is probably closer than some think.

The ABS said the total value of owner occupied housing commitments (seasonally adjusted) fell 1.1% (down $141m) in June 2008, following a revised decrease of 5.2% in May 2008.

“The decrease this month was due to falls in the purchase of established dwellings excluding refinancing (down $95m, 1.3%), refinancing of established dwellings (down $83m, 2.2%), and construction of dwellings (down $27m, 2.5%), while the purchase of new dwellings rose (up $64m, 14.3%).

“The total value of investment housing commitments (seasonally adjusted) decreased 0.3% (down $15m) in June 2008 compared with May 2008, following a revised decrease of 6.1% in May 2008.

“The decrease this month was due to a fall in the construction of dwellings for rent or resale (down $102m, 15.2%), while rises were recorded for the purchase of dwellings by others for rent or resale (up $79m, 13.3%) and the purchase of dwellings by individuals for rent or resale (up $9m, 0.2%).”

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.

 

Peter Fray
Editor-in-chief of Crikey

JOIN NOW