September 8, 2010A pick up in housing finance commitments in July suggests the market may be poised to bounce back from setbacks caused by the ending of the Government’s First Home Owner Boost, according to Master Builders Australia.
New ABS data out today shows Queensland’s total owner occupier loans increased by 1.6 percent in July.
Compared to June, the value of Australia’s total dwellings was up 0.7 percent, seasonally adjusted, while the value of owner occupied housing was 2.3 percent.
In terms of the number of dwelling commitments, owner occupied housing was up 1.7 percent; the purchase of new dwellings was up 1.5 percent and purchase of established dwellings was up 2 percent.
Master Builders’ Chief Economist Peter Jones says despite today’s pick up, a second leg to the housing recovery is not guaranteed.
“Critical for the housing market will be a further period of interest rate stability to engender confidence and encourage upgraders, investors and first home buyers alike,” Jones says.
“There may be a solid pipeline of new building work yet to be done, but Australia needs a major phase of residential building to go anywhere near to meeting the housing needs of the population,” he says.
“Although finance commitments for the building or purchase of new dwellings remain well up on the low point in late 2008, loans need to kick up again after the recent correction.”
Despite some improvement in recent times, Jones says the investment-driven side of the new housing market is still struggling to overcome the credit crunch.
“Master Builders urges the Reserve Bank to keep interest rates on hold for an extended period to ensure that recovery in the interest rate-sensitive residential building sector can regain momentum,” he adds.
