Quarterly Housing Construction Lending Hits Four Year Highs

Wednesday, June 11th, 2014
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More loans for new housing and construction by owner-occupiers were made in Australia over the past three months than for any other quarterly period in more than four years, the latest figures show.

On a seasonally adjusted basis, the combined number of loans made for either the purchase or construction of new housing (owner occupiers only) eased back 1.21 percent from March’s 52 month high of 8,928 to come in at 8,818, as the number of loans made for the purchase of new housing (2,655) dropped back 1.5 percent and that for the construction of new dwellings (6,163) contracted by 1.1 percent.

Over the past three months, however, the number of loans made for new housing (26,514 – seasonally adjusted) was up by 5.4 percent compared with the three months to January and sat at higher levels than for any quarterly period since the three months ended January 2010 when purchasers scrambled to get in before the end of federal government stimulus measures regarding new housing incentives in December 2009 (see chart).

Moreover, even April’s figures were slightly down on the previous month, they still signalled the third highest monthly level of home building activity in more than four years.


Housing Industry Association Chief Economist Harley Dale welcomed the figures, saying the update was consistent with further growth in the detached and low density segment of the industry whilst a modest downward trend in construction in  lending for the purchase of new dwellings still signals historically elevated levels of medium-high density construction being maintained in 2014-15, and added that the encouraging profile for new dwelling construction by owner occupiers is complimented by post-GFC record lending activity for investment in new rental stock.

“There needs to be a clearer indication in mid-2014 of a sustainable recovery in lending for larger alterations and additions,” Dale said. “Overall, however, the profile for housing finance is a positive one for residential construction activity in coming quarters.”

Master Builders Australia Chief Economist Peter Jones agreed, adding that investors remained a key driver of the upturn in activity but noting that first-home buyers represented only 12.3 percent of all dwelling finance during the month (down from an average of 14.3 percent last year) and saying builders would look to the rollout the detail of the federal government’s strategy for economic growth foreshadowed in the budget to boost home-buyer and investor confidence.

Over the past three months, the number of loans for new housing are up by 10.7 percent in Tasmania followed by South Australia (7.5 percent), Western Australia (6.9 percent) Queensland (5.5 percent), Victoria (5.0 percent) and New South Wales (1.1 percent) but were down by 40 percent and 31.8 percent in the ACT and Northern Territory respectively, according to HIA seasonally adjusted estimates.

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