"It stands in pretty stark contrast to the weakness we've seen in a lot of the broader economic data over the last month"
- ANZ head of property research Paul Braddick
A positive data from Australian housing market was published on Friday, a sign that record-low borrowing costs are working to stimulate the property market. The number of mortgage approvals surged by 1.8% in May, up from a 1.2% reading recorded a month earlier. Analysts, however, expected Australian home sales to rise 2.5% in May. Data also showed that the number of commitments to buy a new home jumped 0.7%, while commitments to purchase already established home rose 2.1%, suggesting the improvement will continue gathering momentum.
Even despite the upbeat data, this month's earlier report showed that the number of building approvals in Australia fell from a month earlier in May, the latest sign that deep rate cuts have yet to spur a sustained recovery in the property market. The Australian Bureau of Statistics said that total number of dwelling units approved dropped 1.1% from the previous month on a seasonally adjusted basis, following a 9.5% gain recorded in April. The Reserve Bank of Australia is widely expected to make one more rate-cut to the cash rate by the end of the year, to assure that the situation in housing market will continue improving.
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