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Australian home-loan approvals fell in June, after gaining in May for the first time in eight months, adding to signs the most aggressive round of interest-rate rises by a Group of 20 member is cooling demand for dwellings.
The number of loans granted to build or buy houses and apartments dropped 3.9 per cent to 46,420 from May, when they rose a revised 3 per cent, the statistics bureau said on Monday. The median estimate of 19 economists surveyed was for a 2 per cent drop in approvals.
Demand for home loans has slumped since October, when Reserve Bank of Australia governor Glenn Stevens began the first of six increases to the benchmark lending rate to prevent a bubble in property prices. Annual house price growth slowed in the second quarter, after surging almost 20 per cent in the 12 months to March, a report showed last week.
"[Approvals] are still feeling the effect of the erosion of potential first-home buyers in the market, which is a reflection of falling affordability and future rate [expectations]," said Joshua Williamson, an economist at Citigroup in Sydney. "This is another argument for no further rate rise during the course of the year."
The total value of loans fell 1.9 per cent to A$20.7 billion (HK$147.37 billion) in June, the report showed. The value of lending to owner-occupiers declined 1 per cent. The value of loans to investors who plan to rent or resell homes dropped 3.6 per cent.
Signs that Australia's economic expansion is not stoking inflation and concern about potential fallout from Europe's debt woes were among reasons the central bank left the benchmark lending rate unchanged last week at 4.5 per cent for a third month.
Reports published last week showed homebuilding approvals and retail sales missed economists' forecasts in June, and house price gains decelerated in the second quarter.
"This moderation in the established housing market is a welcome development and partly reflects the return of mortgage rates to around average levels," the central bank said in its quarterly monetary policy statement published last week.
Borrowing has tumbled since the start of the fourth quarter after the government began reducing A$21,000 grants to first-time buyers of newly built dwellings. Those grants were lowered in two steps to A$7,000 on January 1.
First-home buyers accounted for 16 per cent of dwellings that were financed in June, down from 16.2 per cent in May and 27.1 per cent a year earlier, the statistics bureau said.
"[Still, it remains] possible that the current cautiousness in spending by households may not persist, particularly if the unemployment rate continues to decline," the Reserve Bank said last week.
Job advertisements in newspapers and on the internet rose 1.3 per cent in July, a report by Australia and New Zealand Banking Group showed Monday.
This article can be found on South China Morning Post, Wednesday, August 11, 2010

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