New home building market in Australia gets boost
Loans to both investors and owner occupiers for house building in Australia increased at the end of 2014, pointing to ongoing strength in new home building in 2015.
In December 2014, the number of loans to owner occupiers for the construction of dwellings edged higher by 0.8% and over the December 2014 quarter, these loans increased by 1.1% to a level 9.8% higher than in the December 2013 quarter.
The data published by the Australian Bureau of Statistics also show that lending to owner occupiers purchasing newly constructed homes fell by 1.8% during December, and down 4% over the quarter.
The value of lending to investors for the construction of new housing jumped by 44.2% during the month of December 2014 and over the quarter the value of lending increased by 16%.
‘Housing construction loans, in both the owner occupier and investor segments of the market, finished 2014 on a strong note. This provides a very positive signal for activity in the residential construction sector in 2015,’ said Housing Industry Association economist, Diwa Hopkins.
‘Investors are likely to continue playing a key role in adding to the stock of new housing in 2015. The owner occupier side of the market, however, appears to be losing some momentum,’ she explained.
‘While overall owner occupier lending levels remain strong, some signs have emerged that the growth typical of 2013 and much of 2014 may now be moderating,’ she added.
The housing finance release follows substantial upward revisions by the ABS to the level of activity among first time buyers and shows that their participation in the market is much higher than earlier thought. In 2014, lending to first time buyers accounted for around 15% of the total, higher than a decade ago.
‘The key to housing affordability for first home buyers and trade up buyers alike is a supply of dwellings commensurate to the needs of a growing population. The strong performance of the residential construction sector in 2014 has provided vital assistance in this regard,’ Hopkins pointed out.
A regional breakdown of total number owner occupier loans for new housing in December 2014 compared with the same month in 2013 shows the strongest increase occurred in Tasmania with growth of 74.2%.
The Northern Territory saw growth of11.8%, Western Australia was up 11.1%, the Australian Capital Territory up 5.9%, New South Wales up 2.9%, Queensland up 2.8% and South Australia up 0.3%. Victoria was the only state to see a fall at 1.9%.
Meanwhile, the latest result for the HIA New Home Sales Report, a survey of Australia’s largest volume builders, highlights a second consecutive rise for sales in the month of November 2014.
‘Renewed upward momentum in the multi-unit segment drove growth in overall new home sales in late 2014, a trend unlikely to be reversed when the December result comes through,’ said HIA chief economist Harley Dale.
Total seasonally adjusted new home sales increased by 2.2% in November last year following a lift of 3% the previous month. Sales of multi-units surged in both October and November to reach their highest level since September 2003. However, detached house sales dipped by 1.5% in November 2014.
‘Upward momentum was evident in both detached house and multi-unit construction in 2013/2014. However, more recently momentum has been concentrated in multi-units in a situation akin to stage one of the current up-cycle back in 2012/2013,’ explained Dale.
‘The key leading indicator measures of building approvals and new home sales suggest this re-concentration of growth in the ‘multi-unit’ segment will persist into 2015. A focus on housing policy reform would greatly assist in rebalancing the table, providing a further burst of growth in detached house construction which would at the same time provide productivity gains for the broader Australian economy,’ he added.
In November 2014 detached house sales increased by 4% in Victoria, by 16% in Queensland, and by 0.3% in South Australia. Detached house sales fell in November in New South Wales by 5.6% and in Western Australia by 10.6%.