Latest ABS figures on housing finance show that new home lending saw a healthy rise during June, said the Housing Industry Association, who suggests it is linked to the May interest rate cut.
During June 2016, the number of loans to owner occupiers for dwelling construction rose by 2.1 per cent in seasonally adjusted terms while loans for the purchase of new homes saw growth of 2.7 per cent. Overall, new home lending volumes increased by 2.3 per cent during the month and some 6.3 per cent higher than the same month last year.
“The RBA cut its interest rate at the beginning of May so June’s housing finance results are the first month’s data to fully capture the effect of cheaper mortgage costs,” explained HIA Senior Economist Shane Garrett. “Encouragingly, prospective homebuyers seem to have taken advantage of the lower interest rate environment as evidenced by today’s positive results for new home lending,” Shane Garrett pointed out.
“June was also dominated by the close federal election campaign which was the source of some uncertainty across the economy. Today’s data indicate that the benefits of lower interest rates trumped any reluctance by buyers to enter the market during the tight election race. It’s therefore likely that last week’s interest rate cut will help bolster activity on the new home building side,” concluded Shane Garrett.
Compared with a year earlier, the number of loans to owner occupiers constructing or purchasing new homes increased in a number of states over the year to June 2016. The strongest growth was in Victoria (+19.1 per cent), followed by New South Wales (+10.8 per cent). There was a more measured increase in Queensland (+4.3 per cent). . Over the same period, there were substantial reductions in Western Australian (-20.7 per cent), and the Northern Territory (-17.7 per cent) while Tasmania recorded a more modest fall(-3.5 per cent). New home lending to owner occupiers in South Australia and the ACT during June 2016 was comparable with the level a year ago.
