New home and first home buyer lending bounces up in May

First-home buyers have come back into the market, according to ABS housing finance data which shows new home lending increased in May this year.

The ABS has released the Housing Finance data for May 2017, which shows new home lending increased during that month.

Housing Industry Association’s principal economist Tim Reardon said lending to first-home buyers coincided with an increase in lending for new homes.

“This is likely to be due to the ongoing uptake of apartments that have come onto the market this year,” Mr Reardon said.

“Lending figures also show that the amount that first-home buyers are borrowing has remained relatively flat over the past year. An increase in first-home buyers in the market is always welcome and we hope that this improvement can be sustained.

“There was also a growth in lending to new home buyers more broadly, particularly on the east coast. A 28 per cent increase in lending in Queensland for the month (14.6 per cent for the quarter) is the strongest result.”

Lending for investment properties reduced for the second month in a row. Mr Reardon said this might be because of APRA restrictions that were announced at the end of March impacting on the confidence of investors.

During April and May 2017, the value of lending to investors dropped by 2.5 per cent and 1.4 per cent respectively.

“This could also be due to the expectation that home price growth is likely to slow further. The number of loans to owner-occupiers constructing or purchasing new homes increased in a number of states over the year to May 2017,” Mr Reardon said.

The strongest growth was in Queensland (+10.8 per cent), followed by Tasmania (+8.1 per cent), Victoria (+6.0 per cent), South Australia (+2.8 per cent) and New South Wales (+2.5 per cent).

Over the same period, there was a substantial reduction in Western Australia (-15 per cent). Lending activity was also weaker in the Northern Territory and the ACT, with lending in the three months to May 2017 down by 11.5 per cent and 7.9 per cent respectively on levels from a year ago.

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Azal Khan

Azal Khan was a in-house features writer for Elite Agent Magazine.