CANBERRA: Home financing in Australia rose unexpectedly in January, complicating forecasts calling for a down cycle in domestic real estate. The number of home loans issued by Australian authorities rose by a seasonally adjusted 0.5% in January, following a gain of 0.4% gain the previous month, the national statistics office said in a report on Friday. Analysts in a median estimate forecast a month-on-month decline of 0.9%. Investment lending for homes, which is used to gauge fixed residential property, rose 4.2% from December, following a gain of 1% the previous month.
The market for new homes may have peaked in December, but the outlook remains steady, according to data from the Housing Industry Association (HIA). The industry group reported earlier this week that new home sales fell 2.2% in January, with sales of detached and unit homes falling. Like other advanced economies, Australia has seen its home prices rise sharply in recent years as a result of supply constraints and foreign investment. The heads of Australia’s largest banks assured a parliamentary committee earlier this week that the country’s housing market was not in a bubble. The chief executives of Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp all agreed that domestic home prices aren’t over-inflated.
Ian Narev, chief executive Commonwealth Bank, said his institution is “lending at levels we are comfortable with” across the country. Commonwealth is Australia’s biggest mortgage lender. Record low interest rates have fueled the housing binge throughout much of the country, especially in cities like Sydney and Melbourne, whose property values have risen more dramatically in recent years. The Reserve Bank of Australia (RBA) held interest rates at a record low of 1.5% earlier this week, where they’ve stood since the summer.
