Aug. 9 (Bloomberg) -- 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 gains 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 percent to 46,420 from May, when they rose a revised 3 percent, the statistics bureau said in Sydney today. The median estimate of 19 economists surveyed by Bloomberg News was for a 2 percent 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 property-price bubble. Annual house price growth slowed in the second quarter, after surging almost 20 percent in the 12 months through March 31, 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 Inc. in Sydney.
“This is another argument for no further rate rise during the course of the year,” Williamson said.
The Australian dollar fell to 91.72 U.S. cents at 12:13 p.m. in Sydney from 91.79 cents just before the report was released. The two-year government bond yield declined 2 basis points to 4.57 percent. A basis point is 0.01 percentage point.
The total value of loans fell 1.9 percent to A$20.7 billion ($19 billion) in June, today’s report showed.
The value of lending to owner-occupiers declined 1 percent. The value of loans to investors who plan to rent or resell homes dropped 3.6 percent.
Signs that Australia’s economic expansion isn’t 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 percent for a third straight month.
Reports published last week showed home-building 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 Aug. 6.
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 Jan. 1.
First-home buyers accounted for 16 percent of dwellings that were financed in June, down from 16.2 percent in May and 27.1 percent a year earlier, the statistics bureau said today.
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 percent in July, a report by Australia & New Zealand Banking Group Ltd. showed today.
The nation’s unemployment rate probably held at 5.1 percent in July, almost half the level of the U.S., a report will show on Aug. 12, analysts surveyed by Bloomberg said. The rate has fallen from 5.8 percent nine months earlier as employers added more than 300,000 jobs.
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