New home lending still sluggish

According to the latest data from the Australian Bureau of Statistics, the number of seasonally adjusted loans for construction barely moved in April, rising by only 0.2 per cent, while loans for the purchase of new dwellings eased back by 0.4 per cent.

The number of loans for established homes net of refinancing rose by 1.0 per cent during April and was 4.9 per cent higher than one year earlier.

In terms of owner occupiers, the value of loans for the construction or purchase of a new home rose by 2.5 per cent during April 2013 and was 20.1 per cent higher than a year earlier. Lending for established dwellings was a little weaker, with the value of loans falling by 1.6 per cent during April. Nonetheless, the value of lending for established dwellings was still 7.1 per cent higher than 12 months previously.

“Today’s figures show that new home lending for owner occupiers is tracking higher overall, but at a very moderate rate from a low base,” HIA senior economist Shane Garrett said.

“For owner occupiers, the aggregate number of loans for the construction and purchase of new homes was flat during April 2013, itself a disappointing outcome, but the number was 17.9 per cent higher than 12 months earlier.”

The investor side of housing finance provided a stronger result in April, driven by the existing property market. The aggregate value of loans to investors rose by 1.1 per cent in April. However, in a weak update the value of lending for the construction of new residential property fell by 13.3 per cent and was down by 8.1 per cent over the three months to April this year.

“The increase in investor activity with regard to existing property suggests that a view is taking hold that the market outlook is improving. However, residential investment in construction continues to languish near decade lows, a pointer to the disincentive to new home building attributable to excessive tax and regulatory costs,” Mr Garrett said.