Lending up but housing finance declines

Finance for new housing construction declined in May 2015 however new construction finance was still up over the year. Notably, investor finance for new and existing housing also declined over the month but rose for the year.

The latest ABS Housing Finance data released on Friday showed that total dwelling finance dropped by 4.4 per cent, construction finance for new housing dropped by 3.2 per cent and investment loans also fell by 3.2 per cent in seasonally adjusted terms for the month of May 2015.

Despite the drop there was still an overall 13.1 per cent improvement for new housing finance and overall investor lending was 21.8 per cent up over the year.

“The fall in housing investment loans by 3.2 per cent for the month may be a sign that macroprudential measures may be starting to take effect. Overall finance is still promoting a solid supply outlook,” said Executive Director Residential, Nick Proud for the Property Council of Australia.

“Interestingly, the proportion of investment finance that supports rental stock, as opposed to owner occupation, was 33.9 per cent of all new housing in May 2015. This is up from the previous proportion of 23 per cent of all new housing being investment finance for the month of May 2014.

“The percentage of first home buyers, sitting at 15.9 per cent, is low compared to previous years where it had climbed to over 31 per cent.

“There is real uncertainty around first home buyer activity. Outside of the volatility of the ABS’s own numbers from month the month, there is no count of the people buying their first home as an investor.

“Focusing on supply is a central challenge for all governments collectively to tackle by making tax and planning reform a priority.

“Focusing on better understanding demand and supply should be a real priority for government as getting this right will boost housing construction which is not only good for affordability, but keeps the economy strong and provides tax revenues.”

Media contact: Fiona Benson | M 0407 294 620 | E [email protected]