Australian mixed housing finance data would not prevent the Reserve Bank of Australia (RBA) from raising the cash rate in November, economists said on Monday.
Australian housing finance commitments for owner-occupied housing rose one percent in August to 47,540, the Australian Bureau of Statistics (ABS) said on Monday.
While the median market forecast was for a one percent rise in the month, the composition of the data was mixed.
Construction of dwellings fell one percent in the month, while purchases of new dwellings fell two percent.
The only sign of strength in the data was purchase of established dwellings, which rose 1.4 percent in August.
Economist Savanth Sebastian from Australian financial services provider CommSec said, “It’s probably a bit of a concern that finance for construction of housing fell for the 10th straight month.”
But he predicted there would be a rate rise from the RBA in November, because official inflation data released in late October is expected to show steady growth in prices in the September quarter.
Total housing finance by value fell by 1.3 percent in August to 20.15 billion AU dollars (19.89 billion U.S. dollars),according to the ABS.
Economist Paul Brennan from Citigroup Global Markets, the brokerage and securities arm of banking giant Citigroup, said he was concerned that construction lending had fallen for the tenth month in a row.
“So we’re going to need to rely on the consumer (spending) holding up and ultimately we hope we’re going to see next year … business investment kicking in,” he said.
Brennan said the RBA would pay most attention to the strong employment figures when deciding whether to lift interest rates next month.
Meanwhile, Australia’s financial services company, ICAP economist Adam Carr said it was now probable the recent sharp drop in lending was due to the pace of rate hikes.