Home Loans Hit Record Level Before Share Crash

CANBERRA: Home loans hit record levels and retail sales jumped in September as the economy built up steam in the run-up to the share market crash.

Figures released yesterday by the Bureau of Statistics showed that home lending rose by 14.3per cent on the previous month after adjustment for seasonal factors. This was a 42.6 per centincrease on the same month last year.

The surge in lending, which was the highest monthly figure ever recorded, was fuelled by home loan interest rate falls after the July election and the September Budget. Rising consumer confidence and a brighter outlook for the economy also contributed.

But it is unclear whether the share market crash will dent consumer confidence and cause potential home buyers to hang back. Rates have fallen further and the housing industry is now optimistic of a big recovery.

Retail sales increased by 0.8 per cent in September after adjustment for seasonal influencesThis was a sharp improvement on the 1.4 per cent fall in the previous month.

After accounting for inflation, sales rose by almost 3 per cent in the September quarter, a rapid acceleration from the previous three months.

The better figures are consistent with other indicators that the consumer spending was building up a head of steam.

But retailers now expect a grim Christmas as buyers retreat in the face of the share slide.

However, the slowdown will take pressure off imports, which threatened to blow out if consumer spending continued to boom.

Average weekly earnings rose 6.4 per cent over the 12 months to August, according to the Bureau of Statistics.

The lift in earnings for women was higher than for men over the period, up 7.2 per cent compared with 6.3 per cent.

From May to August this year, average weekly earnings rose by 2.2 per cent

In that period, earnings for men rose by 2.3 per cent compared with 1.7 per cent for women.

Only a small proportion of employees had received the second tier wage rise of up to 4 per cent at the time of the August survey date.