Rates on hold as lending stays high
New home lending rebounded in June, according to figures released today, with the total number of dwellings financed rising by 3.2 percent.
Commenting, Wilhelm Harnisch, chief executive of Master Builders Association says the result shows that home buyers’ confidence remains resilient but also that the new home market continues to trend down as lending for this category has fallen by nearly 24 percent from its peak in November 2001.
The Housing Industry Association (HIA) agrees with this, noting that the trend series for construction lending continues to slow, confirming reports from many of Australia’s larger home builders that they are seeing a slowdown in enquiries.
Ruth Morschel, the HIA’s executive director of public affairs and policy, says that in the association’s most recent discussions with members, most reported that activity was down from the peak of around four months ago and cited interest rate stability and the price of land as the major issues for the year ahead.
“Much has been said about the role of low interest rates and the first home owners grant in the latest house price boom, but the real issue for new housing has been the rise in the cost of developed land - up by 250 percent in some cities over the past 18 months,” she says. “As Australia’s cities become more globalised and as the Federal Government undertakes a far more more aggressive migration program, it is vital that the link between land supply and affordability be acknowledged in housing and planning policy debates.”
Both the MBA and HIA welcomed the Reserve Bank’s decision to leave official interest rates on hold. “The RBA’s decision will facilitate an orderly downturn in the new housing market thereby allowing housing to continue to underpin economic and employment growth in Australia over the next six months,” says Harnisch.
Source: Building Products News.
7-Aug-2002