Loans for the construction and purchase of new houses increased for the fifth consecutive month in February, highlighting the success of recent government initiatives.
The Australian Bureau of Statistics report for February shows a 2.6 percent rise in construction loans, and a 4.2 percent lift in loans for new dwellings.
Housing Industry Association Chief Economist, Harley Dale, says first home buyers continue to be a major component of the recovery in housing.
“New home lending has been trending higher since October last year, driven by the tripling of the first home owners grant for new dwellings and the large reduction in variable mortgage rates,” he says.
While first homes continue to boost building activity, Dale says the investor market is experiencing a different result.
“Lending for investment in new residential construction dived by 12 percent in February to be down by 49 per cent on a year ago, sending a negative signal of very tight rental market conditions persisting throughout 2009,” he says.
“It is vital to consider stimulus to the residential investment market to boost dwelling supply which would alleviate the immense budgetary pressure faced by lower income rental households.”
Master Builders Chief Economist, Peter Jones, agrees that additional construction resides in fruitless territory, after loans for investment-housing fell 2.8 percent in February.
“First home buyers are being encouraged into the market but loans to build investment housing have dried up as the project finance ‘drought’ continues,” he says.
“Aggressive moves by the Reserve Bank to bring interest rates down and by the Government through its first home buyer stimulus package are working to release pent-up demand for owner occupied housing.”