Housing finance approvals rose in June

Australian Bureau of Statistics figures released yesterday show that housing finance approvals for June rose 3.2 per cent in June to 53,845, the third monthly increase in a row. This was at the upper end of economists' expectations, as most had anticipated that the market would slow. However, economists expect that there will be a slowing down over the coming year.

The Housing Industry Association said that members have reported that activity is down from the peak four months ago, with the slowing ascribed to the price of land and future interest rate rises.

AMP Henderson Global Investors' Simon Doyle was somewhat surprised by the strong June finance figures but said that it's not unusual for the housing cycle to take longer to turn than expected.

HSBC economist Anthony Thompson said the rise was underpinned by increased refinancing activity and a last-minute rush to finance house purchases before the First Home Owners' Grant was scaled back on July 1st may have helped. The figures show a sharp rise in finance for new house construction, he said. He said that this may spill over into the July figures but in the long term the trend “should remain in decline”.