August sees growth in home lending

The numbers over the June to August period this year are the highest since the building boom of 1994, according to HIA

According to a recent statement by the Housing Industry Association (HIA), figures from the Australian Bureau of Statistics show new home lending activity is at historically very healthy levels.

The number of loans for new housing posted monthly growth of only 0.2% in August 2014, and excluding the GFC-stimulus period of late 2009, the numbers over the June to August period this year are the highest since the building boom of 1994, according to HIA.

“That is very positive news for new home construction heading into 2015, for many parts of the wider domestic economy, and for the labour market,” noted HIA chief economist, Harley Dale.

In August 2014, the total number of seasonally adjusted loans to owner occupiers eased back by 0.9%, marking the sixth consecutive month where total loans have changed by less than 1%.

Loans for construction of new homes fell by 0.8% in August, while lending for the purchase of a new dwelling increased by 2.5%, suggesting further short term out-performance for medium/high density construction relative to detached housing. The number of loans for existing property (net of refinancing) fell by 2.6% in August to its lowest level in 18 months.

Over the three months to August 2014, lending increased in all eight jurisdictions. In August alone, HIA’s seasonally adjusted estimate shows increases in the number of owner-occupier loans for new housing in South Australia (+3%) and Tasmania (+21.7%), while lending was flat in Victoria.

The number of new home loans in August declined by 8.1% in New South Wales, 1.6% in Queensland, 7% in Western Australia, 13.1% in the Northern Territory, and 7.4% in the Australian Capital Territory.

Mr Dale remarked that the positive results should not be drowned out by "negative noise" regarding property price movements in certain heated markets, along with speculation and uncertainty around possible policy responses.

“It would be a perverse and unfortunate outcome for the Australian economy if healthy new home building activity came to a premature end,” he said.