Lending to owner-occupiers to finance the construction of new homes has fallen to its lowest level in almost seven years, the latest data shows.
Releasing its latest report, the Australian Bureau of Statistics says the number of loans made to owner occupiers to finance the construction of new houses and multi-unit dwelling fell by 8.4 percent in November to come in at a seasonally adjusted value of 3,028.
This represents the equal lowest number of loans made to owner occupiers to finance the construction of new homes since December 2012.
Nevertheless, the data also showed that the broader improvement in housing finance conditions (new and established dwellings combined) is continuing.
On a seasonally adjusted basis, the overall number of new loan commitments for residential housing increased by a further 1.7 percent in November to come in at $18.594 billion – up by 18 percent compared with its low point in May last year.
Lending to buy newly built homes (as opposed to those still under construction), meanwhile, has risen by more than a quarter since May – a phenomenon which no doubt reflects not only the broader housing market upturn along with the large volumes of homes which have been built in previous years and are now being sold on the market as newly completed homes.
Whilst presenting an encouraging picture overall, the latest data is a further indication that broader improvements in the housing market are yet to translate into an upturn in new building activity.
This is supported by building approval data, which trended lower in the second half of last year notwithstanding an improved reading in the November result released earlier this month.
Housing Industry Association Senior Economist Geordan Murray says weak housing construction lending is a reflection of subdued sales conditions which developers encountered during the first half of last year.
He says the market for new home construction will stabilise throughout the year as a range of stimulus measures provide underlying market support.
“Stimulus measures, including interest rate cuts, tax cuts and the easing of APRA’s lending restrictions are having a positive impact on the housing market,” Murray said.
“The governments First Home Loan Deposit Scheme will also assist eligible first home buyers enter the market from this month.
“If these conditions remain, the market will stabilise during 2020.”