Lending for new homes continues to grow

“Lending to first home buyers increased by 6.2 per cent in the month of December 2019 to be up by 3.6 per cent for the quarter. This is the highest number of first home buyer loans since December 2009,” said Angela Lillicrap, HIA Economist.

The ABS released the monthly data tracking lending for construction and purchases of new homes, lending for home renovations, and purchasing established homes for December 2019.

“House price growth and lower interest rates are supporting market confidence leading to an increase in lending to owner occupiers for the purchase of a new home which increased by 4.9 per cent in the December (2019) quarter,” added Ms Lillicrap.

“This positive lending data is consistent with other leading indicators, including new home sales and building approvals, showing that the housing market reached a turning point mid-way through 2019. This confirms our expectations that the market reached a new, relatively shallow trough, in 2019.

“We remain concerned that changes to the lending regime for first home buyers mean that access to finance will be an impediment to this segment of the market when owner-occupiers and investors return to the market. The high level of first home buyer activity in the market at present reflects cyclical changes in the market.

“Structural changes to the regulation of banks means that it is increasingly difficult for first home buyers to gain access to finance. There is a risk that this will have an adverse impact on homeownership rates,” concluded Ms Lillicrap.

Across the country, lending to owner-occupiers for new dwellings increased in the December 2019 quarter for all states and territories except for Tasmania which declined by 12.2 per cent. The ACT (+39.9 per cent) saw the largest increase, followed by South Australia (+15.6 per cent), Queensland (+12.7 per cent) and the Northern Territory (+6.7 per cent). New South Wales (+6.3 per cent), Victoria (+6.2 per cent) and Western Australia (+4.7 per cent) also increased in the December quarter.

Source: HIA