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New home lending continues to rise, showing consumers are responding to the low interest rates, new research has found.
According to the most recent ABS housing finance data, new home lending rose for the third consecutive month.
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In the month of July, the number of loans to owner occupiers for the construction and purchase of new owner-occupied homes increased by 0.7 per cent and was 15.5 per cent higher than the level in July 2012.
Within this result, the number of loans for the purchase of new homes increased by 5.9 per cent in the month to a level 52.1 per cent higher than the same month in 2012, while the number of loans for construction fell by 2.1 per cent to be only 1.1 per cent higher than a year earlier.
“There were 8,396 loans to owner occupiers for the purchase and construction of new homes during the month of July 2013, the strongest monthly result since early 2010. This was the third consecutive month that the lending for new homes has increased, which continued the steady upward trend that has been evident since the market reached a cyclical low in early 2011,” said HIA economist, Geordan Murray.
“This is a good result, but the lack of strong upward momentum for the construction component over 2013 to date is disappointing,” Mr Murray said.
However, the Real Estate Institute of Australia (REIA) said the data growth could be contributed to the interest rate cuts and the positive housing outlook, but said that first home buyers are missing out.
“The proportion of first home buyers in the number of owner-occupied housing finance commitments fell to 14.7 per cent compared to the June figure of 15.1 per cent. The figure remains persistently low compared to the long-run average proportion of 20.1 per cent despite seven interest rate cuts since November 2011,” REIA president, Peter Bushby said.
“In large part, this drop can be attributed to state governments withdrawing previous levels of support for first home owners buying established dwellings and it is established dwellings that 80 per cent of first home buyers prefer.”
