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Residential land purchases rose 33% in June

Housing finance figures released by the Housing Industry Association (HIA) today show that buyers returned to the market in June, reflecting both improved confidence and the announcement of the HomeBuilder scheme.

While the total number of home loans still dipped well under the figures for June, 2019, there was a 9.7 per cent rise in lending to those buying established dwellings during June, while loans for residential land jumped 33.8 per cent.

“Home buyers were tentatively returning to the market in June in response to the initial easing of COVID-19 related restrictions and the announcement of the HomeBuilder program,” HIA Senior Economist, Geordan Murray said.

“Evidence of improved market confidence and the HomeBuilder program is starting to emerge.

“The first movers were quick off the mark to secure available blocks of land. The number of loans to owner-occupiers purchasing residential land jumped 33.8 per cent in June.”

While loans for land showed a significant increase, Mr Murray said the HomeBuilder Scheme was yet to impact construction loans.

He expects that might be evident in the coming months, with all states and territories having finalised the application process

“In June the number of construction loans actually dropped to the lowest monthly level since 2012,” Mr Murray said.

“All states and territories are now receiving applications and we expect to see a material lift in the number of construction loans in the months ahead as the HomeBuilder program gains traction.”

However, Mr Murray warned that this isn’t necessarily all good news.

“The surge in lending for land purchases highlights a risk that the availability of residential lots where on-site work can begin within the time-frame of the HomeBuilder package could limit take up under the program,” he noted.

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