Small uptick in home loans an encouraging sign: HIA
A small increase in the value of owner-occupied housing finance in August is an encouraging sign for future housing construction, according to the Housing Industry Association.
The total value of owner-occupied housing commitments excluding alterations and additions rose 1.3% in trend terms and by 0.6% on a seasonally adjusted basis, according to ABS figures for August 2011.
In seasonally adjusted terms, the total number of loans increased by 5.7% in the Northern Territory, 1.1% in Victoria and Queensland, 0.7% in Western Australia and 0.1% in New South Wales.
The total number of loans fell in the Australian Capital Territory (-9.7%), South Australia (-2.1%) and Tasmania (-0.6%).?
"The overall profile for new home lending has essentially bottomed out through the middle months of 2011," says HIA chief economist Dr Harley Dale.
"Considering new home starts fell in 2010-11 and look set for a further decline in 2011-12, it is encouraging to observe this bottoming out in a key leading indicator of new residential construction activity."
"There is a long way to go to turn around the new home building cycle and ensure a sustained recovery can begin making inroads into the substantial dwelling shortage Australia faces,” Dale says.
"It is vital to see a commitment now and in future years from all levels of government to reduce the excessive and inequitable taxation of new housing which cripples new home affordability, hinders labour mobility, and constrains productivity growth."
The number of loans for construction increased by 0.8% in August 2011 while loans for the purchase of a new dwelling were up by 6%, yielding a 2.4% rise overall in new home lending for the month.
The number of loans for established dwellings (excluding refinancing) increased by 0.6% in August.
"New home building conditions remain weak, but interest rates are steady, skilled labour is more readily available, and the market is very competitive. If you're in a financially sound position to do so, now is an excellent time to be building a new home," Dale says.
Commercial loans increased by 7.9% in August, the second consecutive strong month for business loans, coming after a rise of 5% rise in July.
Loans for investment properties were down 0.7% in August.
