Eighth month of housing loan decline

by Rebecca Pike12 Jul 2018

Figures released by the Australian Bureau of Statistics show the number of loans for housing has continued to fall.

In trend terms, the May 2018 figures show a 0.7% decline in the number of owner-occupied finance commitments compared to the month before. This is the eighth consecutive month the figure has dropped. 

The number of owner-occupied finance commitments excluding refinancing also fell by 0.6% in trend terms.

In trend terms decreases were recorded in all states and territories except Tasmania, where lending increased by 0.3 per cent. The largest decrease of 1.9 per cent was in the Australian Capital Territory.

The proportion of first home buyers, as part of the total owner-occupied housing finance commitments, remained unchanged in May at 17.6%.

The value of commitments also fell in May, with investment housing values falling by 1.9%. The dollar amount approved for the purchase of dwellings by individuals for rent or resale is at the lowest level since February 2016.

According to the Real Estate Institute of Australia (REIA) president, Malcolm Gunning, the dollar amount approved for the purchase of dwellings by individuals for rent or resale is at the lowest level since February 2016.

He said, “The continued decline in housing finance confirms the feedback from the market that the APRA restrictions and the fallout from the Royal Commission into Banking have resulted in an extremely cautious approach by lenders.

“Loan applications are now being scrutinised for real costs of living including outgoings such as school fees and use of credit cards.

“At the same time an ultra-conservative approach is being taken by banks with their valuations, which means that funds available are below purchaser’s expectations.

“We need to ensure that lending approaches reflect the market rather than set the market which appears to be case at the moment.”

 

Related stories:
Tighter lending means longer listings
Long wait for first home buyers
Home values continue to fall

 

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