New home lending rises in Australia as interest rates are cut

New home lending in Australia saw a healthy rise during June, up 2.3% and up 6.3% compared to the same month in 2015, the latest data from the Australian Bureau of Statistics shows. The Reserve Bank of Australia cut its interest rate at the beginning of May so June’s housing finance results are the first month’s data to fully capture the effect of cheaper mortgage costs. According to Shane Garrett, Housing Industry Association (HIA) senior economist, prospective home buyers seem to have taken advantage of the lower interest rate environment. ‘June was also dominated by the close federal election campaign which was the source of some uncertainty across the economy. This data indicates that the benefits of lower interest rates trumped any reluctance by buyers to enter the market during the tight election race. It’s therefore likely that the interest rate cut will help bolster activity on the new home building side,’ he explained. A breakdown of the figures shows that the strongest growth in new home lending over the year to June 2016 was in Victoria with an uptick of 19.1%, followed by New South Wales with growth of 10.8% while there was a more measured increase in Queensland of 4.3%. Over the same period, there were substantial reductions in other states, most notably a fall of 20.7% in Western Australian, a fall of 17.7% in the Northern Territory and a more modest fall of 3.5% in Tasmania. New home lending to owner occupiers in South Australia and the ACT during June 2016 was comparable with the level a year ago. Meanwhile, the HIA’s New Home Sales Report, a survey of Australia’s largest volume builders, shows that total new home sales ended 2015/2016 on a higher note. The overall trend is still one of modest decline for new home sales but a bounce of 8.2% in June 2016 highlights the resilience of the national new home building sector, according to HIA chief economist, Harley Dale. ‘The overall profile of HIA new home sales is signalling an orderly correction to national new home construction in the short term, as are other leading housing indicators. Below the national surface, the large geographical divergences between state housing markets have been a prominent feature of the current cycle and that will continue,’ he explained. Comparing the second quarter of 2016 with the same period last year shows that detached house sales were down sharply in South Australia by 21.4%, in Western Australia by 27.5% and in down by 7.3% in New South Wales but up by 17% in Victoria and by 7.1% in Queensland. Overall the sale of detached houses bounced back by 7.2% month on month in June 2016 while multi-unit’ sales continued their recent recovery, up by 11.5% after a lift of 4.9% in May. In the month of June 2016 detached house sales increased in all five mainland states with the largest increase in Queensland at 14.9% and up by 9.1% in Western… Continue reading

The post New home lending rises in Australia as interest rates are cut appeared first on Taylor Scott International.

Taylor Scott International

Comments are closed.