New home lending continues to grow

NEW home lending rose again during June 2013, according to ABS Housing Finance figures released today said the Housing Industry Association.

In the month of June, the number of loans for the construction and purchase of new owner-occupied homes edged up by 0.6 per cent to 8,368. This was 13.3 per cent higher than in June 2012.

"These figures indicate that a steady recovery in the new homes market is continuing, with growth in the number of loans to those purchasing new homes," said HIA Senior Economist, Shane Garrett.

"Encouragingly, growth in new home lending has affected most states, with particularly strong figures from the ACT and South Australia during June.

"The continued growth in activity in new home lending is being driven by the reductions in interest rates which have taken place since 2011 as well as a growing sense that the worst of the international crisis has passed."

Mr Garrett emphasised that the level of growth is still short of what should be expected given the rate of population growth.

"The market will need considerable support to rise to the required levels. Yesterday's RBA cut is welcome from this perspective but issues like the taxation burden on new home building and regulatory restrictions on land availability represent serious impediments to growth.

"The HIA has advanced a detailed set of fifty policy proposals to address these issues. We look forward to these being discussed further during the federal election campaign."

"Delicate sentiment in the market is evidenced by the fact that lending to investors for new home purchases fell by 1.3 per cent during June. As long as sentiment is shaky, the prospects for future growth in the market remain uncertain," concluded Shane Garrett.

In June 2013, the seasonally adjusted number of housing finance commitments (for both new and established owner-occupied housing) increased in NSW (+1.0 per cent), Victoria (+1.9 per cent), Queensland (+4.4 per cent), South Australia (+2.9 per cent), Tasmania (+1.3 per cent), the Northern Territory (+1.1 per cent) and the ACT (+5.3 per cent). Lending declined by 1.6 per cent in WA over the same period.

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