Housing finance slipped again in December. Some of the weakness in the headline numbers was due to refinancing, which isn't so important to growth, but even still the data weren't encouraging. First home owner activity also slipped further on the expiry of grants in several states in late 2012.
Couple this with the soft building approvals data and the recovery in housing market activity looks tentative at a stretch. It is certainly not enough to bank on to drive growth when mining related investment starts to shrink.
House prices are higher, but does that really matter so much for growth at the moment? It is not being driven by a strong increase in borrowing or credit growth. Consumers are also much more cautious than the free-wheeling days before the 2008 crash, with the latest retail sales data showing volumes only just growing over the quarter. Secondary housing market turnover is also not particularly high.
So these data today make it much more likely that the RBA will cut rates again if they want growth to get close their 2-3% forecast for 2013.
