In a welcome sign for the building industry in Australia, the latest figures show finance for new housing construction at its highest level in more than three years.

The combined number of loans made for the purchase or construction of new homes throughout the nation rose 0.73 per cent in July on a seasonally adjusted basis to come in at 8,396 – up 15.5 per cent on the same month in 2012 and higher than any other level on record since early 2010.

Driving the rebound is a recovery in consumer finance for new home purchases, which has risen by more than half over the past 12 months.

By contrast, approval numbers for housing construction loans made to developers edged back 2.1 per cent during the month and are up just 1.1 per cent year-on-year.

new home purchase chart

Building industry groups welcomed the latest numbers but bemoaned the lack of momentum in the developer finance area.

“This is a good result, but the lack of strong upward momentum for the construction component over 2013 to date is disappointing,” Housing Industry Association economist Geordan Murray said, adding that loan numbers for new housing have risen for three consecutive months and that last month’s result continues an upward trend which has been in place since the market hit a cyclical low in early 2011.

Master Builders Australia chief economist Peter Jones says the figures, which follow a lift in building approvals, confirm the low interest rates are having an effect and demand for new housing is returning.

In terms of states, the Northern Territory led the way, recording a 3.6 per cent rise in seasonally adjusted housing finance commitments (new and existing housing), followed by the Australian Capital Territory (up 3.5 per cent), Victoria (up 3.3 per cent), Tasmania (up 1.9 per cent) Western Australia (up 1.8 per cent) and South Australia (up 0.1 per cent), with only Queensland (down 0.9 per cent) registering a decline in lending.