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    HIA reports fresh cyclical high for new homes lending

    Housing Industry Association

    The Housing Industry Association , the voice of Australia’s residential building industry, reports that new home lending has reached a fresh high for the cycle in the September 2014 quarter.

    Quoting figures from the Australian Bureau of Statistics, HIA Chief Economist Harley Dale comments that lending for new housing is at its highest in 20 years. Describing it as a healthy trend in terms of the short term outlook for new home construction, Harley Dale notes that the demand for new housing reflects activity from first home buyers, trade-up owner occupiers, and investors.

    However, the aggregate number of loans for first home buyers is still very low from a historical perspective. According to Harley Dale, turning this situation around requires policy reforms focussed on the excessive and inefficient taxes and regulation levied on housing.

    First home buyer loans reached conspicuous troughs in the early months of 2011, 2013, and 2014, although these levels were 12 per cent higher than the record low in the early 1990s recession. Loan numbers have only lifted by 5.1 per cent from this latest 2014 trough.

    There were differing outcomes across the housing finance spectrum in the September 2014 results. The total number of seasonally adjusted loans to owner occupiers fell by 0.7 per cent, while loans for the construction of new homes increased by 3.1 per cent and lending for the purchase of a new dwelling rose by 0.1 per cent. The number of loans for existing property (net of refinancing) eased by 0.1 per cent in September. The (original) number of first home buyer loans fell by 4.8 per cent in the September 2014 quarter, while the number of trade-up buyer loans increased by 1.3 per cent. The moving annual value of lending for construction of new investment property was 7.1 per cent higher in September than in June, while the comparable rate of growth for the much larger existing property component was 6.0 per cent.

    HIA’s seasonally adjusted estimate for September 2014 shows increases in the number of owner-occupier loans for new housing in New South Wales (+5.1 per cent), Queensland (+4.9 per cent), South Australia (+8.5 per cent), the Northern Territory (+17.8 per cent), and the Australian Capital Territory (+14.6 per cent). Elsewhere, the number of new home loans declined by 1.6 per cent in Victoria; 1.1 per cent in Western Australia; and 11.3 per cent in Tasmania.

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