Refinancing has had an impact on the headline data, which is less important in terms of generating growth. Excluding this, owner-occupied data rose 7.6%YoY on a 3-month moving average basis (3mma). Much of this growth has come from new home sales, which are up very strong since mid-year and 28%YoY 3mma, which is encouraging for developers.
Looking more broadly at the value of total housing finance, which also includes investors, approvals rose 5.1% in the 3 months to October. Investors appear to have been more active, with finance for rent or resale rising, 7% over the same period.
The most powerful source of growth from lower interest rates is from stimulating housing construction, which has been weak over the past few years.
These data do show a large increase in finance for new dwellings, but does appear to be due to one large complex rather than a sustainable trend. We would expect this to drop away next month, but will be worth monitoring.
So these data are not particularly strong with many concerned the RBA is pushing on a string. This maybe an exaggeration, especially given the rate of easing has been relatively slow compared to previous periods. There has also been further easing in the past few months.
The question of whether the RBA needs to ease more aggressively really depends on whether the potential potholes in growth elsewhere are looming faster and larger than previously thought. There is a risk that this will be the case, although given unemployment remains low and overall GDP growth is ok, the RBA is unlikely to be looking for the panic switch.
