Australia’s Home-Loan Approvals, Consumer Confidence Decline

Australian home-loan approvals fell in January by the most in a year as floods inundated the nation’s east coast and consumer confidence slid on expectations a government-proposed carbon tax will lower household income.

The number of loans granted to build or buy houses and apartments dropped 4.5 percent from December, the first fall in seven months, with Queensland state approvals plunging 16.4 percent, the statistics bureau said in Sydney. The sentiment index fell 2.4 percent to 104.1 in March from a month ago, a Westpac Banking Corp. and Melbourne Institute survey showed.

Today’s housing “result was distorted by disruptions from the January floods, which devastated Queensland and impacted parts of New South Wales and Victoria,” Westpac economists led by Bill Evans said in a report after the release.

Reserve Bank of Australia Governor Glenn Stevens held the benchmark interest rate at 4.75 percent for a third meeting this month, citing weaker consumer spending and higher savings. The governor has said the bank will look through the economic impact of torrential rains in Queensland that affected about 30,000 properties, shut coal mines, cut rail lines and damaged crops.

The Australian dollar fell after the data, trading at $1.0081 at 12:51 p.m. in Sydney from $1.0099 in New York yesterday, and was set for its fifth daily decline.

The total value of loans declined 5.3 percent to A$20.3 billion ($20.5 billion) in January, today’s report showed.

Value of Lending

The value of lending to owner-occupiers dropped 4.6 percent, the report showed. The value of loans to investors who plan to rent or resell homes declined 6.8 percent.

First-time home buyers accounted for 15.2 percent of dwellings that were financed in January, down from 15.8 percent in December and lower than 21 percent a year earlier, the report showed today.

Australian consumer confidence fell to a nine-month low in March, the survey of 1,200 consumers taken Feb. 28-March 6 and released in Sydney today showed, with the largest drop of 6.8 percent coming in a gauge reflecting family finances over the next 12 months.

“We expect that the key negative for households, which is highlighted by the prominence of budget/taxation in their assessments, relates to the government’s commitment to introducing a price on carbon by July next year,” Evans said in a statement.

Prime Minister Julia Gillard said Feb. 24 the government intends to set a price on carbon emissions from July next year before moving to an emissions trading plan. Her support fell to a record low in a Newspoll published in the Australian newspaper yesterday as voters rejected the plans.

Source http://www.businessweek.com/news/2011-03-08/australia-s-home-loan-approvals-consumer-confidence-decline.html