May housing finance figures released this week by the Australian Bureau of Statistics show new home lending falling again, following the two consecutive increases in March and April.
The headline figure fell by 1.2 per cent, while commitments for new dwellings fell by 2.3 per cent, seasonally adjusted in May. The number of loans for the construction or purchase of new homes fell by 2.4 per cent in May 2012
Peter Jones, Chief Economist for Master Builders Australia called on the Reserve Bank must consider a further rate cut “unless conditions take a dramatic turn for the better”.
“The industry was hoping for more lift in housing finance given the 50 basis point interest rate cuts in November and December 2011, but disappointingly they were not fully passed on by the banks.
“Today’s figures come too soon to fully reflect the Reserve Bank’s May rate cut, but confirm that buyer confidence remains low.”
The Housing Industry Association (HIA) Chief Economist, Dr Harley Dale.
"A modest lift is evident for new home lending over the three months to May this year and that is reflected in increases across all states and territories," said Dale.
"That is a more encouraging outcome, but the fact is new home loans have been grinding higher over the last 12 months rather than mounting a sustained and significant recovery."
"It is evident that new home starts will bottom at GFC-equivalent levels this year, which is a very poor outcome for Australian businesses, households, and therefore the wider economy," Dale said.
In seasonally adjusted terms, the number of loans for construction and purchase of new homes increased in May 2012 in Queensland (up 1.7 per cent), South Australia (up 9.9 per cent), Tasmania (up 0.1 per cent), and the Australian Capital Territory (up 3.1 per cent). Monthly declines were recorded in New South Wales (down 8.0 per cent), Victoria (down 0.8 per cent), Western Australia (down 6.3 per cent), and the Northern Territory (down 23.8 per cent).
On a more promising note, Dale said: "Across loans for new and existing property there has been a modest increase for both first time buyers and trade-up buyers over the last year, but from a relatively low base.”
Seasonally adjusted figures show all states posted an increase over the quarter ending May 2012.
New South Wales posted a 5.8 per cent increase, while Victoria was up by 1.4 per cent, Queensland by 2.4 per cent, South Australia by 2.2 per cent, Western Australia by 0.5 per cent, Tasmania by 13.7 per cent, the Northern Territory by 7.3 per cent, and the ACT by 7.6 per cent.
