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Modest revival in new home lending in Australia

‘There is a modest revival underway in the established lending market which now extends to five rises in six months,’ said Harley Dale, chief economist at the Housing Industry Association, the voice of Australia’s residential building industry.
The combined number of loans for construction/purchase of a new dwelling was effectively flat in November 2011, up just 0.3% and is down by 8% when compared to the same month in 2010.

Over the three months to November 2011 the total number of first home buyer loans was 19% higher when compared to the same period in 2010, while loans for trade up buyers rose by 2.4%.

The seasonally adjusted number of loans for new housing, that is construction and purchase of new homes, increased by 5.6% in New South Wales, by 8.4% in Queensland, by 13.4% in South Australia, by 20.9% in the Northern Territory and by 17.5% in the Australian Capital Territory.
The number of loans for new housing fell by 8.5% in Victoria, was down by 3.3% in Western Australia and by 8.9% in Tasmania. Over the three months to November 2011 lending for new housing was down in all states and territories except for Tasmania, Western Australia and Queensland.

‘The second half of 2011 saw a renewed trend decline in new home lending, a concerning situation which further highlights the risk of new housing starts approaching GFC-like levels once more,’ explained Dale.
‘The continuing recovery in the aggregate number of loans for first time buyers, and to a lesser extent trade up buyers, is encouraging and is being driven by the established market.
However, a sustained recovery in new housing, including investment in new rental stock, won’t occur without the combination of interest rate cuts, short term government stimulus, and longer term policy reform,’ he added.