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Housing credit continues to balloon

Colin BrinsdenAAP
Regulators have been monitoring the impact of low interest rates on house prices and mortgage demand
Camera IconRegulators have been monitoring the impact of low interest rates on house prices and mortgage demand Credit: AAP

Housing credit for owner-occupiers has grown at the fastest annual pace since October 2016 as borrowers chase ever-increasing house prices with interest rates at record lows.

The Reserve Bank of Australia said owner-occupier housing credit grew by a further 0.8 per cent in August to an annual rate of 8.4 per cent.

Overall housing credit, including investors, was up 0.6 per cent to 6.2 per cent for the year.

Credit more broadly, taking in housing, business and personal loans, rose 0.6 per cent to be 4.7 per cent up over the year.

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The data comes the day after Australia’s financial regulators - including the RBA - warned they are looking at measures to take the heat out of the housing market through macroprudential measures.

The Australian Prudential Regulation Authority plans to soon publish an information paper on its framework for implementing such policies.

Separate figures showed building approvals unexpectedly rose 6.8 per cent in August to 18,716.

Economists had expected a further five per cent decline in the month.

Approvals for detached housing rose 3.5 per cent to 12,009, while excluding houses, approvals jumped 13.7 per cent to 6453, the Australia Bureau of Statistics said.

“The August result indicates that approvals for detached housing remain strong despite the unwinding of stimulus measures in April and the ongoing lockdowns in New South Wales and Victoria,” ABS director of construction statistics Daniel Rossi said.

“Driven by record low interest rates, increased household savings and confidence in the housing market, private house approvals are 23.8 per cent higher year-on-year and 42 per cent higher than August 2019.”

Separately, the ABS said job vacancies tumbled by 10 per cent between May and August, but are still 46 per cent higher since the start of the coronavirus pandemic.

ABS head of labour statistics Bjorn Jarvis said the fall in job vacancies coincided with lockdowns NSW, Victoria and the ACT, and followed earlier shutdowns in Queensland and South Australia.

“It was the first drop in vacancies since May 2020, during the initial wave of COVID-related lockdowns and restrictions,” he said.

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