New home lending and property prices up in Australia
New home lending in Australia increased during the March quarter this year, alongside a further strengthening in dwelling prices, according to the latest figures from the Australian Bureau of Statistics.
The value of lending to both owner occupiers and investors purchasing or constructing new homes increased during the March 2014 quarter. Owner occupier lending was up by 3.6% while investor lending increased by 4.9%.
The data also shows that capital city residential property prices increased by 1.7% during the first quarter of 2014, and are now 10.9% higher than a year ago.
‘Following a period of fairly strong increases late last year, prices appear to be growing within a more sustainable range,’ said Diwa Hopkins, Housing Industry Association economist.
‘Combined with the current low interest rate environment, these developments provide favourable conditions for the residential construction sector. Sustained strength in new home building will be of increasing importance on a number of fronts,’ she explained.
‘In the first instance, Australia has seen quite strong population growth in recent years, yet the supply response has lagged and much catch up is needed in order to meet that additional demand for housing,’ Hopkins pointed out.
‘Also, as policy makers are acutely aware, the current winding down of mining investment and the likely substantial withdrawal of public demand both represent significant headwinds to the economy’s near term growth prospects,’ she added.
‘Residential construction is a key area of growth, which also has considerable links with rest of the economy. A sustained recovery in residential construction will be a crucial ingredient to a broader economic recovery,’ she concluded.