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New Home Loans Lifting Despite Softening Housing Finance: HIA

While housing figures released last week show that while overall lending slowed in April this year, the number of loans to households building new homes has reached it’s highest level since 2015.

“(The) result is a positive sign for detached house builders and supports our view that demand in this part of the market is likely to remain robust throughout the next phase of the cycle,” said Geordan Murray, HIA Senior Economist.

“There has been considerable focus on the residential building cycle recently, particularly relating to an expected reduction in activity over the year ahead. However, commentary has often considered the residential building sector as a whole and overlooked the different cycles for detached house building and the apartment sector.

“The number of construction loans to owner-occupiers increased by 2.1 per cent in the month, and the number of such loans during the three months to April 2017 is 1.9 per cent higher than it was a year earlier.

“Loans to owner-occupiers purchasing ready-built new homes declined by 3.0 per cent in April, but lending in the April ‘quarter’ was still 6.0 per cent higher than a year ago.

“This part of the home loan market is being affected by volatility due to the timing of apartment completions and settlements. This is likely to be a consistent theme over the remainder of the year,” concluded Geordan Murray.

The number of loans to owner-occupiers constructing or purchasing new homes during the three months to April 2017 quarter was stronger than a year earlier in five of the eight states and territories. The largest increase was recorded in Queensland (+6.5 per cent), followed by Tasmania (+5.3 per cent), Victoria (+3.7 per cent), South Australia (+2.6 per cent), and New South Wales (+2.2 per cent). The largest fall was recorded in the Northern Territory (-27.2 per cent), followed by the ACT (-18.8 per cent) and Western Australia (-11.9 per cent).

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