New home lending continues climb

Housing Industry Association (HIA) senior economist Shane Garrett said the figures were a good sign: “These figures indicate that a steady recovery in the new homes market is continuing, with growth in the number of loans to those purchasing new homes,” he said.

“Encouragingly, growth in new home lending has affected most states, with particularly strong figures from the ACT and South Australia during June. The continued growth in activity in new home lending is being driven by the reductions in interest rates which have taken place since 2011 as well as a growing sense that the worst of the international crisis has passed.”

The HIA, however, warned that the level of activity in the housing market is well below where it should be, given the strong population growth.

“The market will need considerable support to rise to the required levels. [Tuesday’s] RBA cut is welcome from this perspective, but issues like the taxation burden on new home building and regulatory restrictions on land availability represent serious impediments to growth,” said Mr Garrett.

“Delicate sentiment in the market is evidenced by the fact that lending to investors for new home purchases fell by 1.3 per cent during June. As long as sentiment is shaky, the prospects for future growth in the market remain uncertain.”

In June 2013, the seasonally adjusted number of housing finance commitments for both new and established owner-occupied housing increased in NSW (by 1.0 per cent), Victoria (by 1.9 per cent), Queensland (by 4.4 per cent), South Australia (by 2.9 per cent), Tasmania (by 1.3 per cent), the Northern Territory (by 1.1 per cent) and the ACT (by 5.3 per cent).

Lending declined by 1.6 per cent in WA over the same period.