SUPPLY, DEMAND & VALUE
Supply Nationally - housing approvals continued to improve in February, albeit at a slower rate. February housing approvals increased by 0.1%, pushing 3-monthly rolling growth into positive territory for the first time since November 2007 at 0.7%. While slightly improving, national housing approvals continue to sit well below the long term average by 20%. On a state by state basis, housing approvals were mixed with NSW, VIC and WA recording growth of between 0.1% and 1.8%. QLD and SA recorded falls of 1.8% and 2.7% respectively. Approvals for ‘other dwellings’ for February improved by 34% after large falls over 2008. This allowed the 3-month moving growth to increase by 2.8%. Growth in WA (166%), NSW (85%) and SA (29%) contributed largely to the national increase. VIC also improved by 15% in January while QLD recorded a decrease of 23%.
Demand Nationally - the numbers of finance commitments by owner occupiers to construct or buy a new dwelling have been improving for the past six months. February finance commitments to construct or buy a new dwelling increased 3.1% and the 3-month moving total increased by 5.3%. Current commitments are still 6% weaker than the long term average however the gap has been narrowing. The number of commitments by owner occupiers for existing dwellings (excluding re-financing) has also been on the up in the last six months. February commitments
for existing dwellings increased by 3.2% and continue to exceed the long term average by 5.1%. Despite mortgage rates at historically low levels, the improving demand is expected to be slowed in 2H 2009 as the pull forward effect from the first home buyers boost ends, coupled with increasing unemployment levels affecting confidence. Median gross unit yields either increased or remained stable in all capital cities over the fourth quarter of 2008, with the exception of Darwin. The driving factor to the
improvement in gross yields has shifted to value declines, although has been helped by some rental increases over the period.
Value Nationally - On an annual basis, gross unit yields have improved significantly in most capital cities, with the exception of Darwin, which continued to fall to 5.0%. Perth has seen the most improvement due to large price falls (9.9% in 2008), with yields rising from
to 4.2% to 5.3% over the year. Significant increases were also seen in Sydney which rose from 4.8% to 5.7% and Hobart which rose from 4.4% to 5.3%. Gross yields in the remaining cities improved by between +0.2% in Canberra to +0.6% in Melbourne to currently range between 5.3% and 4.4%.
Source: Westpac Banking Corporation Monthly Report
