Housing finance market continues to strengthen: ABS

Housing finance market continues to strengthen: ABS
Staff reporterDecember 7, 2020

Housing data is continuing to show improvement from the low point was reached in April to May 2019, according to the ABS Lending to Households and Businesses data for October 2019 

Lending for the purchase or construction of a new home rose by 3.4 per cent in October.

Despite the improvement, lending remains 3.4 per cent lower than in the three months to October compared with the same time in 2018.

Tim Reardon, HIA’s Chief Economist said, "lending data and new home sales data both suggest that the market has improved since the middle of 2019."

“First home buyer activity remains strong despite the increase in house prices. First home buyer commitments rose by 1.4 per cent for the month of October and they now account for nearly 30% of all buyers."

“Stimulus measures, including interest rate cuts, tax cuts and the easing of APRA’s lending restrictions are having a positive impact on the housing market."

“If these conditions remain, the market will stabilise during 2020, at levels well below those experienced in recent years,” concluded Mr Reardon.

The number of owner occupier loans relating to new homes reached a 14-month high during October 2019.


Shane Garrett, Chief Economist, Master Builders Australia said, "there is also solid evidence that confidence has is returning to the investor side of the market with the value of lending on that side of the market up by 1.4% during October. Having declined for 11 straight months since mid-2018, investor lending has turned around registering increase during four of the past five months"

“Based on recent results around building approvals, house prices and lending, it does seem that people are optimistic about the prospects for the housing market in 2020. Activity is going to get a further boost in January with the activation of NHFIC’s First Home Loan Deposit Scheme,” he said.

“Managed properly, the clear improvement in housing market sentiment could help re-ignite confidence amongst consumers more widely and across the business community. The absence of optimism amongst these players is one of the main stumbling blocks for economic growth at the moment."

“The best way to build momentum is for the government to do everything it can to get new infrastructure projects rolling as early as possible. Building and construction projects are highly visible and represent the best way to signal to everyone that we are gearing up for a bright economic future,” Shane Garrett concluded.

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