4 madmacs & quality value hunters, page-11

b2 housing boom..the age


Housing boom continues
May 14 2003
By Tim Colebatch
Economics Editor
Canberra





Banks and other lenders wrote a record $9 billion in loans in March to people buying, building or refinancing their homes, as the housing boom surged to a new high.

The Bureau of Statistics reported that, after seasonal adjustment, Australians took out a record 53,373 mortgages in March. The banks lent almost $7 billion in mortgages, a record, while mortgage brokers and other lenders lent $2.05 billion.

The amount lent averaged $176,200 for people buying existing properties, up 8 per cent on March last year. For new housing, the average loan was $174,600, up 14 per cent, partly because fewer first home buyers are entering the market. Lending to first home buyers accounted for just over 15 per cent of loans, close to an all-time low.

It is not clear whether this is because they had already secured their loans in 2001-02 when the Government was offering higher grants, or whether price surges since 2001 have priced them out of the market.

Reserve Bank figures show the total stock of home lending rose 21 per cent in the year to March, reaching a new high of $387 billion, almost four times the $105 billion lent for housing a decade earlier.


Investors ignored repeated warnings from Reserve Bank governor Ian Macfarlane and kept buying into the market, pushing up prices and driving most of the growth in the past year. Reserve Bank research shows most investors are writing off their losses against tax, effectively making other taxpayers subsidise their costs. Even owner-occupiers are changing houses at close to record rates, while the number swapping one mortgage for another keeps soaring to record highs.

In March, the bureau estimates, a seasonally adjusted 14,735 householders refinanced their homes for $2.23 billion; both the numbers and the amount of refinancing set new records. Almost 40 per cent of refinancing lending was in NSW and 20 per cent in Queensland.

Victoria remained the centre of new housing activity, accounting for 6817, or 28 per cent, of all mortgages for new homes. The average new home sold for $171,700 and the average established home for $170,000.

After dipping in February, the number of new mortgages in Victoria rebounded in March to a seasonally adjusted 12,235, with just over $2 billion lent out. Both figures were close to record levels, but the surge in activity in recent months has been in Queensland and South Australia.

Lending for alterations and additions jumped to $451 million for the month and $1.3 billion for the March quarter, 29 per cent more than a year earlier.

Master Builders Australia said the figures were further evidence that any housing slowdown would be relatively mild. Chief executive Wilhelm Harnisch said the figures suggested there could even be a recovery.

He said there was significant work still in the pipeline and lending for alterations and additions was still strong.