Lending for new home building eased in April 2019


“Home lending figures released by the ABS show the number of loans to households building new homes continued to fall in April (2019),” said HIA’s Senior Economist, Geordan Murray.

“A number of factors are likely to have weighed on the market activity during the month, notably the succession of holidays around Easter and ANZAC Day along with a higher degree of uncertainty as the federal election approached,” said Mr Murray.

“The number of loans to owner-occupiers financing the construction of a new home fell by 5.2 per cent in the month. Softer lending in the segment is consistent with the drop in new detached house sales in the major east coast markets over recent months.

“The number of loans to owner-occupiers purchasing new homes that have already been built posted a modest lift in the month. This lift is likely to reflect settlement of multi-unit dwellings purchased off the plan as these projects reach completion.

“Figures also show further contraction in value of lending for home renovations and in lending to investors.

“Overall, April (2019) was another soft month for home lending and with pre-election uncertainty reaching a peak in May (2019) we are unlikely to see an improvement next month.

“There has been a marked improvement in housing market sentiment in the weeks following the federal election. When combined with the RBA’s rate cut and the prospect that APRA may allow lenders a greater degree of flexibility in assessing loan serviceability, there is cause to be optimistic that lending activity could improve as the year progresses,” concluded Mr Murray.

Source: HIA