Home lending 'dragging itself off the canvas'
By
Adam Smith
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12/07/2011 5:00:00 AM
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New home lending could be seeing signs of revival following ABS figures showing two consecutive months of rises, the HIA has said.
Yesterday's ABS data indicated a 5.7% increase in the number of loans for the construction or purchase of new housing. The result follows a 3.3% rise in April. HIA senior economist Andrew Harvey said the housing sector could be on the mend, though recovery is some time away.
"Hopefully new home lending is finally dragging itself off the canvas, although we need much more than today's improvement to lift us from what is a chronically low level of new home lending," Harvey commented.
Harvey said in spite of the positive result, new home lending in the first five months of 2011 is 15.7% lower than the same five month period last year.
"When we consider how important new home lending is as a leading indicator of residential building activity the overall profile does not bode well for home building levels in Australia. If the pre-GFC trend in new home lending had continued then we would be seeing lending in the order of 10,000 loans per month rather than the 6,000 or so loans we currently have," Harvey claimed.
The REIA has expressed a much less optimistic outlook on the figures, claiming the trend increase of 0.1% in overall finance commitments show that the market has stagnated. It also lamented the decrease in the number of first home buyers as a proportion of housing commitments. First home buyer participation fell from 15.8% in April to 15.4% in May. REIA acting president Pamela Bennett said the low levels of first home buyer participation were a concern, and took aim at the government's newly-detailed carbon tax and its potential effects on buyers looking to enter the market.
"With the impact on building costs of the just announced carbon tax expected to fall disproportionately on first home buyers, as the REIA continues to highlight, this group of buyers is edging closer towards endangered species status," she said.
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