ABS figures out this month showed that new home lending volumes slipped back during May, said the Housing Industry Association, the voice of the residential building industry.
During May 2016, the number of loans to owner occupiers for dwelling construction fell by 2.7 per cent in seasonally adjusted terms while loans for the purchase of new homes inched up by 0.5 per cent. In aggregate, total new home lending volumes weakened by 1.7 per cent during the month and were 2.1 per cent lower than in May 2015.
“Despite the reduction in the RBA’s official cash rate at the beginning of May, new home lending volumes experienced a slight reduction,” remarked HIA Senior Economist Shane Garrett.
Source: HIA“The federal Budget was also delivered on the same day and prospective homebuyers are likely to have taken a step back from the market until its implications became clear,” Shane Garrett explained.
“With the federal election result now clear, potential homebuyers are likely to return to the market with a great deal more certainty. The prospect of another interest rate reduction later in the year will be welcomed by those looking to enter the market. We expect new home lending volumes to strengthen over subsequent months as a greater number of apartments currently under construction reach settlement,” concluded Shane Garrett.
Compared with a year earlier, the number of loans to owner occupiers constructing or purchasing new homes increased in five of the eight states during May 2016: Tasmania (+16.7 per cent), the ACT (+10.7 per cent), New South Wales (+8.6 per cent), Victoria (+8.5 per cent) and South Australia (+3.0 per cent). Over the same period, loan volumes declined in Western Australia (-12.8 per cent), the Northern Territory (-8.3 per cent) and Queensland (-3.2 per cent).