Lenders are pumping an extra $3.7 billion a month into the housing market compared with a year ago, but the economy probably needs more than that.
Figures from the Australian Bureau of Statistics on Monday showed the value of housing loans, including loans to both home-byers and investors, rose by a bit over one per cent in July, to be up by 18 per cent from July 2012.
In annual terms that would work out to about $44 billion.
It sounds like a heck of a lot of money and it’s one reason the Reserve Bank of Australia and others with their eye on the economy think the long series of interest rate cuts to record lows is having an effect.
But will it be enough?
The economy, as last week’s national accounts confirmed, is growing at about three quarters of its normal pace – not enough to stop unemployment from edging higher.
That annual rise in lending, $44 billion, works out to about three per cent of gross domestic product (GDP).
Most of it represents just a transfer of wealth from one owner to another, one mortgage debt racked up as another is paid off.
Loans that can be identified as lending for new housing – either newly constructed or yet to be built – were up by 17 per cent from a year earlier in July.
But that rise, if annualised, represents only a little over $5 billion a year, or 0.3 per cent of GDP.