The slowdown in housing construction activity throughout Australia continues to intensify, with the latest data showing lending activity to finance new housing construction at near 10-year lows.

Released on Friday, data from the Australian Bureau of Statistics indicates that on a seasonally adjusted basis, the number of new loans which were made to owner occupiers to finance either the construction of a new home or the purchase of a newly erected dwelling fell by 7.5 percent in November to come in at 5,057 – the lowest level on record since June 2013.

The latest data provides further confirmation of a slowdown in the market for new home construction which has taken hold since the Reserve Bank of Australia began its aggressive monetary policy tightening cycle.

This has resulted in eight consecutive monthly increases in interest rates since May.

Since then, the number of loans which were made to owner occupiers to finance new home construction has contracted for six straight months. Combined, this has led to a 19.2 percent fall in the seasonally adjusted number of new homes which were approved for owner-occupiers to buy newly erected dwellings or construct new homes over that time.

This comes on top of earlier data showing a third consecutive month of contraction in residential building approvals.

The data comes amid growing concern that the downturn in new home construction may be more severe compared with what has been previously anticipated.

Housing Industry Association Senior Economist Tom Devitt said the data showed that both investors and owner-occupiers were retreating from the market.

Devitt cautioned that the full impact of rate hikes on new building activity will not be evident until the latter part of this year.

He called on the Reserve Bank to hold fire on future rate increases until the full effect of the current cycle of rate hikes becomes evident.

“Investors and owner-occupiers, alike, are retreating from the market,” Devitt said.

“This contraction in lending occurred before the RBA increased the cash rate in December and we expect an ongoing decline in lending as the full impact of the increase in interest rates flows through to households.

“There are long lags inherent in this cycle and the full impact of the increase in the cash rate in 2022 will not be observed until late in 2023.

“The RBA has already undertaken the steepest hiking cycle in a generation, and it needs to hold fire on further hikes to give their actions to date time to play out.

“The RBA will not restore the economy to stable growth by putting the building industry through boom-and-bust cycles.

“As building activity slows in 2023, the RBA will be under increasing pressure to reverse course in the second half of this year.”