Qld tops housing finance growth: CommSec

The CommSec State of the States report January 2021 has revealed that the value of owner-occupier housing finance commitments are above decade averages in all of the eight states and territories, up from seven economies in the previous quarter.

The report – which assesses the performance of each state and territory on a quarterly basis using eight key indicators to provide an economic snapshot of how the states and territories are navigating the coronavirus pandemic – has revealed that, “remarkably”, home loans were above year-ago levels in all economies, mirroring the outcome in the previous report.

According to the figures – which have been compiled by measuring the value of owner-occupier home loans and compared with the decade average for each respective state and territory – Queensland has dethroned Tasmania from the last quarter’s report to clinch the top spot, with the value of home loans up by 65.5 per cent on the long-term average.

NSW was the second strongest performer, with the value of home loans up by 60.5 per cent, followed by the ACT (up 57.7 per cent) and Tasmania (up 52.3 per cent).

The Northern Territory has recorded the weakest performance in housing finance, with commitments 27.8 per cent higher than its decade average, while commitments in Victoria were up 38.7 per cent on the decade average, followed by Western Australia (up 45.9 per cent) and South Australia (up 47.1 per cent).

On an annual comparison, Victoria has continued to record the slowest annual growth at 11.4 per cent, followed by the ACT (up 24.8 per cent) and South Australia (up 26.6 per cent).

The Northern Territory has posted the highest level of commitments, up 91.1 per cent, followed by Western Australia (up 75.6 per cent), Queensland (up 48.5 per cent), NSW (up 28.2 per cent) and Tasmania (up 27.4 per cent).

Commenting on the importance of the housing finance indicator for the assessment of economic performance across the country, the report said: “Housing finance is not just a leading indicator for real estate activity and housing construction, but it is also a useful indicator of activity in the financial sector.

“It would be useful to compare figures on commercial, personal and lease finance, but long-term data is not available.”

Tasmania leads in dwelling commencements

Home building, or dwelling starts (another indicator used in the report to assess the economic performance of the states and territories), has been the strongest in Tasmania, driven by “above normal” population growth and relatively low house prices compared with the mainland.

The figures – which were measured using the seasonally adjusted number of dwelling starts with the comparison made to the decade-average level of starts – have revealed that in the September quarter, starts in Tasmania were 23.5 per cent above the decade average, followed by Victoria, up 2.9 per cent.

However, all other states and territories have recorded a decline in starts, with South Australia recording a 0.6 per cent fall on the decade average, followed by NSW (down by 9.3 per cent). This saw South Australia lift from fifth to third spot.

The other states and territories have recorded more substantial falls, with dwelling starts in the Northern Territory 64.4 per cent below the decade average, while starts in Western Australia were down 41.3 per cent, and the ACT declined by 40.5 per cent, while Queensland dwelling starts declined by 22.1 per cent.

Three of the states and territories have posted gains in terms of annual changes, with Victorian starts up 13.0 per cent, NSW up by 7.4 per cent Tasmania up by 2.7 per cent.

However, starts have fallen the most in Western Australia (down 9.7 per cent), followed by Northern Territory (down 8.8 per cent), Queensland (down 8.7 per cent) and the ACT (down 7.6 per cent). South Australia has posted a marginal fall of 3.0 per cent.

Four of the states and territories have posted quarterly gains, led by South Australia, which was up 11.7 per cent.

However, the ACT – where dwelling starts have been volatile over recent years – has recorded a 43.1 per cent fall in starts to 721 in the September quarter, which has taken starts to a two-and-a-half-year low.

According to the report, construction work – which was measured using the total real value of residential, commercial and engineering work completed in seasonally adjusted terms in the September quarter – was higher in the September quarter in four of the states and territories than the decade average, down from five economies in the previous quarter.

Victoria has retained the top spot, with construction work done 18.8 per cent above its decade average, but in the Northern Territory, construction work done in the September quarter was 65 per cent below the decade average.

Meanwhile, equipment investment was above decade-average levels only in Tasmania (up 16 per cent) in the September quarter, compared with three economies in the June quarter.

The State of the States report has come at the same time as the Housing Industry Association's (HIA) Housing Scorecard Report, which has shown that the ACT has topped the rankings for the first time since 2014, based on its performance of 13 key residential building indicators, while Victoria has plummeted in its rankings due to the COVID-19 crisis and extended periods of lockdown.

[Related: Low rates could see 30% house price rise: RBA]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.