New home lending still at 20-year lows – HIA

Loans are 27.7% lower than the same quarter in 2022

New home lending still at 20-year lows – HIA


By Mina Martin

The number of loans for the construction and purchase of new homes has increased in September, but they continue to hover around their lowest levels in the past two decades, according to Tom Devitt (pictured above), HIA senior economist.

ABS’ Lending to Households and Businesses data for September, which offers insights into housing finance commitments, revealed that there were just 4,282 loans issued for the construction or purchase of new homes in September, leaving the last three months 27.7% lower than the same quarter last year.

“Lending activity has been weighed down by the fastest increase in interest rates in a generation,” Devitt said. “This is drying up the pipeline of new home building work across the country.”

In a media release, Devitt predicted that this low volume of lending and approvals would result in the lowest number of new housing starts in a decade in 2024.

“There are very long lags in this cycle due to the record high volume of building work that was in the pipeline when the RBA first raised rates in May 2022,” Devitt said. “The volume of houses under construction only started declining in the June quarter of 2023, and remains elevated, a year after the first increase in the cash rate.

“This large volume of building work has obscured the impact of these rate rises on the broader economy, especially unemployment, as the building industry employs over one million Australians. This slowdown in lending for new housing will make it increasingly difficult to reach the Australian government’s target of building 1.2 million new homes in five years.”

In original terms, the total number of loans for the purchase or construction of new homes in the September quarter decreased in all jurisdictions compared to the same quarter the prior year. The most substantial declines were seen in the Australian Capital Territory (-70%) and the Northern Territory (-59.4%), followed by South Australia (-32.3%), New South Wales (-30.9%), Tasmania (-30.1%), Victoria (-27%), Queensland (-26.4%), and Western Australia (-15%).

Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.

Keep up with the latest news and events

Join our mailing list, it’s free!