Boom is back in housing!!

[The Mint Man]

Came accross this yesterday..
Care to discuss.
Boom is back in housing

Real estate is booming again. A record $20 billion was lent to home buyers in May, a stunning 18 per cent rise on a year ago ”” shortening the odds of an interest rate rise next month.

Bureau of Statistics figures show an astonishing surge in real estate turnover ”” by owner-occupiers and investors alike ”” has pushed lending well above the record set in 2003.

In May alone, borrowers brushed aside the Reserve Bank's rate hike, to lift lending by 4.5 per cent.

While construction lending remained flat, lending to buy existing homes soared by more than 5 per cent in the month, and by 24 per cent in the year.

Financial markets responded by fully pricing in a further rate hike within three months, with a better than even chance of a third rise by Christmas.

The most likely time is when the Reserve Board meets on August 1, six days after the release of the June-quarter consumer price index.

Economist Jarrod Kerr, of JPMorgan, forecasts the figures will show both core and headline inflation above 3 per cent.

Bankers Trust economist Tracy McNaughton said the data added to the case for another rise. "Of greatest concern for the bank is that investors are starting to creep back into the market, while owner-occupied activity is accelerating rapidly," she said.

The statistics across the board are showing the economy on a rising tide.

The Melbourne Institute has lifted its growth forecast for 2006-07 to 3.8 per cent.

Forecaster Mark Crosby said the outlook had improved significantly, even in the past two months.

Nothing is growing faster than home lending.

Borrowing by owner-occupiers to buy existing homes is now 29 per cent or $2 billion a month higher than at the peak of the 2003 boom.

After falling from $7.2 billion to $6.1 billion after the 2003 rate rises, it has swollen by 50 per cent in a little over two years, to a record $9.3 billion in May.

Most of that has been driven by rapid growth in the number of borrowers.

In May, almost 40,000 loans were issued to people moving into existing homes, 33 per cent more than two years ago, suggesting record real estate activity.

Borrowing by investors is also rebounding at an astonishing rate. After almost overtaking lending to owner-occupiers at the peak of the 2003 boom, it sank rapidly, then bottomed, and did not pick up until the NSW Government dropped its controversial exit tax on landlords last August.

Since then, its rise has been meteoric. In May, seasonally adjusted lending to investors buying existing real estate jumped to $5.6 billion, up almost $1 billion or 21 per cent in just nine months, and 6 per cent in May alone ”” despite the rate rise.

Interestingly, the number of new borrowers has risen more rapidly than the size of loans.

The average loan to owner-occupiers buying existing homes in May was $233,100, 7 per cent higher than the $217,400 a year earlier. There is no sign of that growth accelerating.

And this also
Market took RBA hike in its stride

Real estate agents were not surprised by the strong home loan figures for May.

Home buyers seemed to ignore the Reserve Bank decision to lift interest rates by 25 basis points, especially in Melbourne's most expensive suburbs.

"The market is still very supply driven, the eastern-suburbs market is as strong as ever; we are getting record results every month and, due to the shortage of supply, there's no downturn at all," said Andrew Macmillan, director at Bennison Mackinnon Carmichael.

Mr Macmillan said there had been "very minimal impact" in the markets his firm operated in since the rate rise, which include Malvern, Armadale, Richmond, East Melbourne and South Yarra.

"The interest rate rises tend to affect the investment market. You might see a change in one- or two-bedroom apartments, however, your traditional housing stock is virtually unaffected."

According to the recent Bureau of Statistics figures, Victoria recorded the strongest growth in May, with the number of owner-occupier commitments up 7.9 per cent.

ANZ senior economist Ange Montalti said those figures tended to be "pretty volatile" but the trend was improving. "Fundamentally, the Victorian housing market is not in too bad shape, even if there's a little bit of pent-up demand," he said. "We don't expect it to languish like the NSW market has so far." The only weak spot was the construction finance numbers, which he said were moving sideways.

The number of construction finance approvals was up 1.2 per cent nationally, compared with 4.7 per cent for owner-occupied housing as a whole. The Housing Industry Association said the recovery in new home building was "still lacking pace".

just for the record, I was one of those 40000 people in may

here are the links:
http://www.domain.com.au/Public/Article.aspx?id=1152637709347&index=PropertyNews
http://www.domain.com.au/Public/Article.aspx?id=1152637712493&index=NationalIndex

 

[krisbarry]

Which means....up go the rates

Lock those loans in now

 

[The Mint Man]

Which means....up go the rates

Lock those loans in now

already done

 

[Realist]

If the boom is back in property I am monkey's uncle.

I'm not suggesting you did a bad thing buying.

But if you expect a boom in house prices in the near future you are kidding yourself.

Houses are expensive as it is, there is no possible way in hell they'll "boom" over the next year. It is impossible (in Sydney anyway - I wont speak for other areas)!! and yes you can quote me on that.

 

[The Mint Man]

But if you expect a boom in house prices in the near future you are kidding yourself.

no I dont. just good to see 'some' positive news. It dosnt worry me... Im not in it purely from an investment point of view, in other words Im not looking to sell anytime soon, its a PPOR..... Wasn't even looking to buy when I made an offer on it (which was accepted), put some money down, didnt even have a loan pre approved let alone ever had a loan at all. had to get it all done in a day or so
Anyway, it was the right price ($30000 below evaluation), right location etc.

Houses are expensive as it is, there is no possible way in hell they'll "boom" over the next year. It is impossible (in Sydney anyway - I wont speak for other areas)!! and yes you can quote me on that.

OK I will,

Houses are expensive as it is, there is no possible way in hell they'll "boom" over the next year. It is impossible (in Sydney anyway - I wont speak for other areas)!! and yes you can quote me on that.

: couldnt help it

 

[Realist]

Im not in it purely from an investment point of view,

Then now is a great time to buy a home!!

It aint a great idea to be buying an investment property though.

 

[noirua]