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Lending for new homes in Australia rises slightly

The number of loans for the construction and purchase of new owner occupied homes edged up by 0.6% to a level that is 18.1% higher than a year earlier.

The seasonally adjusted number of housing finance commitments for both new and established owner occupied housing increased by 1% in New South Wales, 2.6% in Victoria, 3.9% in Queensland, 0.6% in South Australia, 3.4% in Western Australia, 1.7% in Tasmania and 4.7% in the Northern Territory.

The total number of housing finance commitments fell by 0.5% in the Australian Capital Territory.

‘These figures show that new home lending to owner occupiers is continuing to consolidate the stronger gains made earlier on in the year. The current pace of improvement, however, is still quite modest,’ said Housing Industry Association economist Diwa Hopkins.

‘Looking at new home lending across the states and territories, it is encouraging to see that these improvements have been reasonably broad based. In most jurisdictions, the number of loans over the three months to May 2013 is substantially higher than 12 months ago. The unfortunate exception is Tasmania, where new home lending has suffered a particularly protracted decline,’ she explained.

In terms of lending to investors, in aggregate, the value of lending was up by 1.5% in May. Much of this improvement was driven by lending for new homes, which increased by 17.2% following a weak result the previous month.

‘These improvements are certainly welcome but fall short of a level of new home lending consistent with the strong residential construction recovery our economy and population requires,’ added Hopkins.

Meanwhile, the cost difference between buying and renting in Australia has fallen significantly, according to analysis from RPData. Discounted variable mortgage rates are now 1.75% lower than their 2011 peak and fixed mortgage rates are 2.65% lower.

Capital city property prices are 2.9% lower than when they peaked in October 2010 and rental rates are rising, up 3.2% over the past year for houses and 2.8% higher for units across the capital cities

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