A modest improvement in ABS Housing Finance in the month of October is insufficient to shake off a deteriorating outlook for new home building, claims the Housing Industry Association.
HIA chief economist, Dr Harley Dale, says that in October 2010 the number of loans for the construction of new homes was flat while loans for the purchase of new homes increased by 9.4 per cent.
Lending for construction has now been trending down for 12 months and over the three months to October 2010 loans for construction/purchase of a new dwelling declined by 1.6 per cent to be 29 per cent lower when compared to the three months to October last year.
"There is a renewed weakening in new home building conditions underway. This situation was readily apparent before the interest rate hikes of early November, but these hikes have exerted a considerable negative impact on sentiment and activity in the housing industry," Dale says.
"A period of interest rate stability, as indicated in yesterday's Reserve Bank statement, is certainly an appropriate stance and we hope the RBA sticks by that message it has conveyed."
"Meanwhile a lack of available finance for residential development continues to plague the housing industry. The tightness of credit is an untenable situation if Australia is to make inroads into addressing its considerable housing shortage which is adding to the affordability woes of entry level buyers and renters alike."
In seasonally adjusted terms, in October 2010 the total number of owner occupier loans increased by 1.4 per cent in New South Wales and was up by 1.9 per cent in Victoria, 3.6 per cent in Queensland, 0.2 per cent in Tasmania, and 5 per cent in the Australian Capital Territory. Loans fell by 0.8 per cent in South Australia, 0.9 per cent in Western Australia, and 22.1 per cent in the Northern Territory.
Over the three months to October 2010 the number of new home loans fell by 5.8 per cent in New South Wales, 6 per cent in Victoria, 5 per cent in Queensland, and 18.4 per cent in South Australia. New home loans were up over the three month period in Western Australia (1.8 per cent) and Tasmania (2.5 per cent).
