A striking thing about the flow of statistics this week is the continuing confidence people have in housing.

This confidence has been skillfully exploited in the December stimulus package’s increases in grants for first and existing home buyers which has added a turbo boost to the rate cuts from the Reserve Bank.

This is despite the worsening jobs outlook, falling confidence levels and grim news from overseas, more and more Australians are taking a plunge back into housing; but not all houses.

The Federal Opposition and others now can’t say the December stimulus package hasn’t worked: it has and housing is showing the first sign of real life for sometime in states like NSW, the country’s usual home building capital.

The Australian Bureau of Statistics figures yesterday revealed that new-home buyers accounted for a quarter of loans written in the month — the highest proportion since 2001. At the peak of the housing boom in 2004, new-home buyers made up just 12% of the market. Total home loans rose 6.4% in the month for the third monthly rise in a row. And the number of loans extended to people building new properties rose 9.9% in December.

Goldman Sachs JBWere said this morning that approvals for first home buyers made up a record high 37% of new established loans in December and are a massive 60% higher than mid-way through last year.

“Growth has been broad-based across states, highlighting the effectiveness of the boost to the FHB grant, sharply lower rates and improved housing affordability (via weaker house prices). Interestingly, the recent finance approvals data for owner-occupier construction is nowhere near as negative as private sector house building approvals, suggesting that the fall in approvals has been due to the developer side of the market rather than owner-occupiers.”

Anecdotal reports are that the boom has continued through January into this month. One Sydney conveyancing solicitor based in the city’s mid western suburbs say that have so far opened 20 new files this week on purchases and have at least 35 in the cooling off period for agents, and others still to to be processed by agents.

Others confirm that and banking sources say the demand has been strong. Loan to valuation ratios are high: around 90% and all loans are insured, with the banks, especially St George, pushing self insurance by way of what’s being called a “mortgage extension fee”. That means the banks are passing the business on to their in house insurers rather than place the business with PMI (now owned here by QBE) or with Genworth.

The value of the houses are concentrated in the $400,000 or less range, but there’s little demand for houses in the $700,000 and above range in Sydney’s west and North West. They bought their homes in the last boom and are carrying big mortgages of $400,000 to $500,000 or more.

The solicitor said many clients remained confident about their jobs, even though he had pointed out the worsening economic picture and asked them to think carefully about taking out a mortgage.

The confidence is being driven by the first home owners grants in the December stimulus package, and by the sharp drop in interest rates.