Loans to new homes on a high, first home buyers re-emerging

Finance commitments are on the rise for those buying new homes, and it appears that first home buyers are making themselves seen again with the second consecutive rise now being recorded, according to Australian Bureau of Statistics data.

Master Builders Australia chief economist Peter Jones pointed to the 2.2% seasonally adjusted rise as something that will “inspire continuing confidence” in residential building.

“The latest housing finance data for June also means that the rate of growth is up 10% seasonally adjusted through the year,” said Jones.

“First home buyer commitments rose for the second consecutive month, a positive sign for the industry that may herald a continuing return of first home buyers to the market,” he said.

Meanwhile, Housing Industry Association economist Diwa Hopkins said that this follows significant declines in the December and March quarters, but that the June 2014 quarter is now recording an uptick – at a modest 1% pace.

“Over the full 2013/14 fiscal year new home lending increased by 12%. With lending rates remaining very low, turnover in the established home market has risen, as have home prices. The residential construction industry has responded strongly to these signals,” she said.

“In terms of new home lending being a leading indicator of residential building, today’s housing finance figures suggest home building activity should continue its strong recovery as we progress through the second half of the year.”

However, CommSec chief economist Craig James pointed to loans for new home building hitting a four year high, with first time buyers lifting to 13.2%, and also noted that the number of owner occupier commitments generally was up by 0.2% in June, but the value increased by 1.8%. He noted that this was the biggest rise in seven months.

First home buyers’ loan commitments are still below the long-term average of 20%. Across Australia, the average home loan was $327,000, or 7.4% up on one year prior.