First buyers give up chasing prices | Liverpool City Champion
First-time homebuyers appear to be giving up on the pursuit of steadily rising home prices, with mortgage demand falling sharply for a second consecutive month.
The same can’t be said for China’s unquenchable thirst for iron ore, which helped push Australia’s trade surplus to a record $ 12.1 billion in July.
Figures from the Australian Bureau of Statistics on Thursday showed loans to first-time homebuyers fell 6.8% in July, following a 7.8% drop in June, and have now fallen 20% since January 2021 .
“First-time homebuyers’ activity will continue to decline as housing affordability deteriorates and stimulus packages such as HomeBuilder conclude,” said BIS Oxford Economics economist Maree Kilroy.
Data released this week showed signs of a real estate boom due to accessibility constraints.
However, this does not prevent real estate investors from entering the void.
Investor loans rose another 1.8 percent in July, a whopping 98.7 percent increase for the year.
“Investor loan commitments have seen a period of uninterrupted growth since October 2020,” said Katherine Keenan, ABS’s finance and wealth manager.
At the same time, a 5% increase in exports propelled Australia’s trade surplus to a record $ 12.1 billion in July, from a revised surplus and a previous peak of $ 11.1 billion in June.
Imports increased by 3 percent.
The increase in exports was driven by a 7% increase in non-rural goods, especially China’s strong demand for iron ore.
This continued strong demand for the red steel metal comes despite lingering trade tensions with China, which has already seen the Asian giant block several commodities from Australia.
“My feeling is that these tensions are going to last for a while,” said Shane Oliver, chief economist of AMP Capital, during an online panel discussion on S&P Global Ratings.
“But at the same time, it is very difficult for China to switch to other iron ore supplies. Australia accounts for 50% of the iron ore exported in the world and there is not enough supply. elsewhere to stop this. “
This online discussion also revealed that economists are not as confident as Treasurer Josh Frydenberg that the economy will rebound strongly after an expected slowdown in the September quarter.
The Treasury estimates an economic contraction of at least 2% in the September quarter, reflecting the full impact of COVID-19 lockdowns in NSW and Victoria.
However, Frydenberg expects a strong rebound in activity – similar to the recovery from last year’s recession – once vaccination rates reach 70% and 80% and restrictions are relaxed.
RBC Capital Markets chief economist Su-Lin Ong expects a larger quarterly contraction of three percent and a slower recovery.
“There’s a good chance we’ll never go back to type zero cases, there will likely be restrictions of some sort likely towards the end of this year and even early next year,” he said. Ms. Ong told the panel.
“It’s going to temper the activity. I don’t think we’re going back to the type of world we were in before Delta.
HSBC chief economist Paul Bloxham takes a similar view.
“We had ‘V’ shaped recoveries last year because we went back to zero cases and reopened,” he said.
“This time around, we think the recovery is going to be much, much more gradual.”
However, they both believed there would be a partial recovery in the December quarter, avoiding a technical recession of two consecutive negative quarters.
Associated Australian Press