New home lending lifted in May, encouraging some commentators to predict the tide is turning in the nation’s current weak residential building levels.
The number of loans for the construction or purchase of a new dwelling rose by 5.7 per cent in May, which comes on top of the 3.3 per cent rise experienced in April.
Loans for the purchase of a new dwelling increased by 4.6 per cent in May 2011, while lending for construction posted a 6.2 per cent increase in the month.
In seasonally adjusted terms, the number loans for new housing in the month of May 2011 increased by:
- 6.0 per cent in New South Wales
- 3.9 per cent in Queensland
- 5.3 per cent in Victoria
- 5.4 per cent in South Australia
- 10.0 per cent in Western Australia
Loan numbers fell by:
- 2.7 per cent in Tasmania
- 6.1 per cent in the NT
- 7.5 per cent in the ACT
ANZ economist David Cannington told Fairfax media that May’s figure meant there had been two months of fairly positive data after the sharp downturn early in 2011 and that the November rate hike was fading out of the market.
He added that the numbers suggested investors were coming back to the market after the drop off earlier in the year, and that bank lending had returned to be the highest in about two years, suggesting a recovery from the global financial crisis.
HIA Senior Economist, Andrew Harvey said: “Hopefully new home lending is finally dragging itself off the canvas, although we need much more than today’s improvement to lift us from what is a chronically low level of new
home lending.”
"Unfortunately, back in January new home lending shifted down yet another gear in what now looks to be a "double-dip" in home financing activity. New home lending in the first five months of 2011 is down by 15.7 per cent on the same five months in 2010 as the interest rate hike of November last year buffeted the confidence of potential home buyers," said Harvey.
"When we consider how important new home lending is as a leading indicator of residential building activity the overall profile does not bode well for home building levels in Australia. If the pre-GFC trend in new home lending had continued then we would be seeing lending in the order of 10,000 loans per month rather than the 6,000 or so loans we currently have."
