Lowest monthly growth in housing lending for at least 12 years

Lowest monthly growth in housing lending for at least 12 years

Housing lending almost ground to a halt in June, recording its lowest monthly increase since the Reserve Bank started recording the data 12 years ago.

Lending for housing rose just NZ$112 million last month to NZ$169 billion from NZ$168.984 billion in May.

Although housing lending has grown every month since the central bank’s records begin in June 1998, that’s the lowest month-on-month growth since July 1998.

It’s also little more than an eighth of the monthly average of NZ$802 million over the 12 year period.

The growth was up just 2.8% year-on-year in both May and June compared to highs in the 17% range in 2004.

The lending slow-dowm has come as mortgage approvals hit lows, the volumes of house sales fall, and as the Reserve Bank increases the Official Cash Rate for the second straight month.

Mortgage approvals have also been softening. For the week ending June 23, 4,965 home loans were approved, according to the Reserve Bank. That was up from 4,818 in the previous week, ending a run of four consecutive weeks of record lows for non-holiday periods since those records began in October 2003.

The Real Estate Institute of New Zealand (REINZ) said this month that 4,575 houses sold in June, down 12% from May and down 24% from June 2009.

Economists expect housing market activity to remain weak through the remainder of 2010, following tax changes in May's Budget around depreciation rules that have reduced the attractiveness of holding investment property for some, slowing net migration and rising interest rates.

Meanwhile, Reserve Bank figures show deleveraging in the business sector with business owing banks NZ$72.8 billion in June. That's down NZ$407 million from NZ$73.3 billion in May, and down 7.4%, or almost NZ$6 billion, since June last year.

Rural lending rose by NZ$226 million with farmers owing their bankers NZ$47.3 billion in June, up from NZ$47.1 billion in May. However at 2.7%, the year-on-year growth is well down from nearly 15% a year ago.

Consumer lending, covering credit cards, hire purchase, car loans and personal loans, fell NZ$32 million to NZ$11.87 billion in June from NZ$11.90 billion in May.

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Wishing you the best.



The RBA’s credit aggregates out today showed Aussie credit growth slowed significantly in June. After rising 0.5% month-on-month in May, it rose just 0.2% last month. As JP Morgan economist Helen Kevans puts it, housing credit was the main laggard. On a three month annualised basis, credit growth declined from 4.9% to 3.9% in June.

FYI house prices are now falling in Australia


After 17 consecutive months of solid growth, dwelling values across Australia’s capital cities recorded their first monthly decline of 0.7 per cent in June, according to the RP Data-Rismark Hedonic Home Value Index. This was the largest monthly fall in home values since April 2008. "This represents a striking deceleration in the quarterly rate of increase in home values," RP Data said.