Home loan flow implies rising house prices

Ian Rogers
The current level of home loan approvals in Australia "are at levels which indicate a degree of home-buyer activity that has typically been associated with rising house prices", Ric Battellino, the deputy governor of the Reserve Bank of Australia told a housing conference in Melbourne yesterday.

So while growth in housing credit is at between seven to eight per cent, and a little below long-term averages, the RBA continues to point out that there is plenty of housing finance available to the Australian economy, even if the business models of some suppliers have crumbled and the market share of major banks is much higher than before.

Battellino noted that accelerated loan repayments by many borrowers - and taking advantage of low interest rates to reduce principal - was one factor restricting the growth in credit.

He said that current levels of growth were at a pace which is "more than adequate to fund the new investment in housing that is needed."