Figures released this week by the Australian Bureau of Statistics show finance for the construction and purchase of new dwellings increased 4.1 per cent in August, up 10.7 per cent from the same period last year.
Chief economist at Master Builders Australia, Peter Jones, said the figures show welcome signs of improvement for the housing industry, but should be read with some caution.
“The positive trend that has emerged in the housing finance figures is a very welcome sign, but does not herald a recovery for the sector just yet.
“The figures reveal that housing finance may have found its floor which is encouraging, but also shows that any recovery will be coming from an extremely low base.
“The industry had hoped for an earlier and sharper uplift, given substantial interest rate cuts from the Reserve Bank. The time it has taken for these cuts to have any effect shows there is still widespread new home buyer caution.
“For momentum to build, the market will need a resurgence in first home buyers and investor demand.
“With new home buyer incentives set to start in several states soon, the outlook for the sector is starting to improve. However, global economic conditions remain volatile and a setback would undo any groundwork for a recovery,” Jones said.
Housing Industry Association Chief Economist, Dr Harley Dale said: "The 2.6 per cent increase in total housing finance net of refinancing in August 2012 marked the sixth consecutive rise."
"That is encouraging, but the base for the recovery has to date been too narrow."
"A recovery in the number of loans to first time owner occupiers appears to be entrenching itself, but lending to the larger 'trade-up' owner occupier market has been losing momentum since March."
"On the new home front, lending for the purchase of new dwellings increased strongly in August (up 13.9 per cent), which is an encouraging result, although a flat month in terms of loans for construction was disappointing."
"After posting a strong increase in June, the number of loans for the construction of owner occupied dwellings largely flat-lined in July and again in August," said Dale.
"Meanwhile, lending for the construction of new investment properties has been trending down since March."
"Hopefully interest rate cuts together with policy initiatives in New South Wales and Queensland will see a sustained improvement emerge in these key construction lending figures," said Dale.
"Right now the profile for housing finance is a reminder that we have yet to see compelling evidence of either a new home building recovery or of a sustained recovery in the trade-up buyer and investor markets," added Dale.
In August 2012 the total number of seasonally adjusted loans increased by 3.3 per cent in New South Wales, 4.1 per cent in Queensland, 1.2 per cent in Western Australia, 3.2 per cent in Tasmania, and 2.7 per cent in the Australian Capital Territory.
The number of loans fell by 1.2 per cent in Victoria and was down by 2.9 per cent in South Australia and 6.3 per cent in the Northern Territory.
