The surge in first-home buyer demand for housing finance might be moderating, but the latest housing finance figures confirm there’s still solid demand for housing finance from investors and owner-occupiers.

The figures from the Australian Bureau of Statistics show that in seasonally adjusted terms, the total value of dwelling finance commitments (excluding alterations and additions) rose 0.7% in August, to $22.78 billion.

There was an increase recorded in investment housing commitments, up 7.6%, but the value of owner-occupied housing commitments fell 1.7%. The figures confirm that housing finance for new home building was solid in August, with the number approved rising 4.6% in August, seasonally adjusted. The number of new dwelling construction loans approved jumped to 6614, worth $1.623 billion. Both were the highest since the first-home buyers scheme changes were introduced late last year.

They were higher in August because the grants for new home buyer builders were to fall from October 1 and August was the last month when it was considered safe to obtain finance and sign contracts on a new home project.

And demand for new homes was a touch stronger again; the number loans was up 4.9% in August over July. It had been up just 1% in July. The number of new loans approved for the purchase of an existing new home all hit new highs of 2760 and their value rose to $785 million respectively.

The number of loans for the purchase of existing homes (including refinancing) fell 1.5% in August (seasonally adjusted) after a small fall in July. The number of loans approved for the purchase of existing houses fell to 53,3445, worth $14.135 billion. Both were lowest since March of this year, showing that there was a distinct cooling in demand.

As a result there was a fall of 0.6% in the number of finance commitments for owner-occupied housing (including refinancings) in August, seasonally adjusted, to 62,718.

That, however, was a bit misleading, as overall the number of refinancings fell 5.6% (seasonally adjusted) in August as buyers opted to trade up to new houses instead of refinancing at these low interest rates and then perhaps renovating.

Excluding refinancings, the number of owner-occupied dwellings financed rose 1.3% in August, seasonally adjusted. The number of bank loans fell 0.5% in August and the number of loans approved by non-bank lenders continued falling, down 7.4%.

The ABS said that in original terms, first-home buyer commitments as a percentage of total owner-occupied housing finance commitments fell from 25.3% in July 2009 to 24.7% in August.

And the prospect of rising interest rates didn’t worry people in August with the the number of fixed-rate loan commitments as a percentage of total owner-occupied housing finance commitments dropping from 7.2% in July 2009 to 6.3% in August.

The seasonally adjusted estimates decreased in most states and territories with the exception of Australian Capital Territory, South Australia and Victoria.

“Between July and August 2009, the average loan size for first home buyers increased $1000 to $270,800. The average loan size for all owner-occupied housing commitments remained unchanged at $266,600,” the ABS said.

It’s no wonder that a survey out this morning showed that the home-building sector expanded for the first time in more than a year in September.

Peter Fray

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