The number of home loans being approved has fallen for a second straight month, but the value of those loans are rising as house prices surge.
Housing finance in September fell 0.7 per cent, more than expectations of a fall 0.4 per cent.
The value of total housing finance rose 2.3 per cent in September, seasonally adjusted, the Australian Bureau of Statistics said.
CommSec economist Savanth Sebastian said the housing sector remained strong, as the number of loans for the construction of a dwelling was up 3.1 per cent.
“There is still ongoing strength in the housing sector in terms of a lift in the supply of housing,” he said.
“That lift in property prices is raising the average loan size.”
Growth in investor lending continues to outpace loans for owner occupiers, with the value of loans approved for owner occupied housing up 1.4 per cent in September, compared to a 3.7 per cent rise in approvals for investment.
The Reserve Bank of Australia recently expressed its concern about the surge in investment housing shutting owner occupiers out of the market.
“In terms of what the Reserve Bank can do to blunt that investor market without seeing a substantial pullback in the housing market is an ongoing question,” Mr Sebastian said.
“You’ve got such uncertainty around business investment, so you need the housing sector to drive growth.”
JP Morgan economist Tom Kennedy said there doesn’t seem to be any easing in the rise in investment housing, which will be a concern for the RBA.
“That really just adds to the concern that the RBA has voiced that activity is a lot more imbalanced right now than it has been in the past and that could be problematic,” he said.
However, Mr Kennedy doesn’t believe reforms to lending standards, due to be announced by the end of the year, will be too drastic.
“We do think it’s going to be more of a light touch approach in terms of increasing serviceability buffers or things like that,” he said.