"The housing boom is cooling off but it's still going to remain relatively strong"
-Savanth Sebastian, CommSec economist
The number of Australian home-loan approvals remained unchanged in May, adding to signs that the country's housing market is taking a break after a year of strong growth. Home loans came in at seasonally adjusted 52,092 in May, remaining steady month-on-month. Previously, the gauge dropped a revised 0.2% in April. The figure beat economists expectations for a 0.5% decline in home loans. Also, mortgages for the construction of new houses climbed 0.9% in May from a month earlier, while those to buy newly built homes jumped 1.7%. Lending for the purpose of buying already lived-in houses declined as much as 0.2%. The Aussie dollar remained weak following disappointing unemployment data, trading at 0.9386, down 0.09% after the data showed housing finance came in flat.
Housing sector appeared to be one of the few areas of strength in the Australian economy as a long resources boom cools. The Reserve Bank of Australia has cut rates eight times since late 2011 in a bid to boost activity in areas like retail and housing that have led previous expansions. At the same time, the central bank has been worried about the housing sector overheating, resulting in risky investment that could undermine an economic recovery that still remains fragile. Interest rates at a record-low 2.5% have helped fuel the expansion in home lending in recent years.
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