While new home loans were at high levels in late 2015, the beginning of this year has seen activity decline, reported the Housing Industry Association.
Compared to February last year, this year saw home loans for the construction of new houses down by 2.8% while the number of loans to buy new dwellings was 2.6% lower. In seasonally-adjusted terms, loans for new dwelling construction dropped by 1.9% in February, while loans to buy new houses declined a significant 15.4%.
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Shane Garrett, senior economist from the HIA, said that “the decline in new home loans during January and February is consistent with our view that new home building will moderate during 2016 from last year’s record highs even though the number of new home starts this year is still likely to be one of the highest on record.”
Despite the decline in loans for new dwellings, Garrett said that there was growth in the total number of owner occupier loans. He also added that “it is important to remember that new home lending volumes are still high by historic standards.”
The number of loans for the construction or purchase of new homes by owner occupiers in the lead up to February 2016 was strongest in the Northern Territory, rising by 37.4% compared with the same time last year. This was followed by New South Wales, which increased by 20.2%. After that, growth dropped considerably, with Victoria at 9.3%, followed by South Australia (4.7%), Queensland (3%) and the ACT (2.5%). Tasmania and Western Australia were not so lucky, with loan volume dropping by 33.1% and 20.4% respectively.
Garrett said that while some markets will continue to perform in the short-term as they ride the wave of recent construction, others, where growth has not been as strong, may not benefit as much. Garrett called on state governments to be “prepared to step in and offer support to our industry as required over the next few years.”
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