Outlook for new dwelling construction strong, says Housing Industry Association

The latest lending figures suggest strong building activity in 2015, with the potential for a cut in rates

According to the Housing Industry Association (HIA), the latest lending figures demonstrate new home building activity is set to remain strong.

The November 2014 lending figures recorded by the Australian Bureau of Statistics found that the number of owner occupier loans for new dwellings dropped by 1.4%, and lending was 4.6% higher than November 2013. Meanwhile, new home loans increased by 0.7% in the three months to November and were 7.3% higher than the same period a year earlier.

HIA senior economist Shane Garrett cautioned that though the number of loans remains high, there is little sign of further growth.

“The number of loans for new home purchase has fallen over the past year,” said Garrett. “Fortunately, the flow of loans for new home construction is very solid.”

Garrett notes that “healthily functioning” housing markets should see a substantial turnover of homes in any given month, however the total volume of loans for home purchase has been falling consistently over the past few months.

“As home prices have risen, so too have the stamp duty bills paid by ordinary homeowners. Excessive taxation is hampering the efficient operation of Australia’s housing market. The issue requires immediate attention,” urged Garrett.

The Real Estate Institute of Australia (REIA) says the November figures suggest a potential rate cut.

“The November 2014 lending figures indicate a moderating market with November being the tenth consecutive month of modest drops in lending levels if refinancing is excluded,” says REIA president Neville Sanders.

“With moderating housing lending and GDP growth below trend, inflation well within the RBA’s target zone, the RBA Board should be considering a cut in interest rates at its February meeting.”