Forex Flash: AU housing market highlights interesting trends – RBS

According to Greg Gibbs, An FX Trading Strategist at RBS, “The waning of the AUD this morning after a weaker than expected building approvals data suggests that the tentative signs of recovery in housing highlighted by the RBA remain just that – tentative.”

The divergence between apartments and homes is also apparent in the housing finance data. Finance approvals for owner-occupier construction were firming through the first three quarters of 2012, but fell-back in the last quarter. On the other hand, finance approvals for property investment jumped in Q4. This probably reflects the low rates in Australia encouraging investors to move back into invest in property for rental return – rents are reported to be rising and vacancy rates low in some large cities including Sydney.

However, households generally are not as confident in their finances and the housing market to up their investment in their own home. “This may reflect a sense that property prices are unlikely to rise much and job security is slipping as unemployment ticks higher and job ads decline.” Gibbs adds.