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{{propApi.successMessage}} {{region}} Change locationBuilding loans remain at 15 year low
Building loans remain at 15 year low
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“Lending for the purchase or construction of a new home remains at its lowest level in 15 years,” stated HIA’s Chief Economist, Tim Reardon.
Friday, 05th May 2023
The ABS released the Lending to Households and Businesses data for March 2023 today.
“The number of loans issued to purchase or construct a new home remained stable in March compared to the previous month, to be 30.7 per cent lower than at the same time last year,” added Mr Reardon.
“The last time so few loans were issued for the purchase or construction of a new home was in November 2008, when the GFC caused a contraction in building.
“This data confirms that ongoing and significant declines in new home sales will see new home commencements slow significantly in the second half of 2023, under the weight of the higher cash rate.
“There are very long lags in this cycle and the full impact of the RBA’s rate increases are still to fully hit the housing market, let alone the broader economy.
“The weak lending figures observed by the ABS in March will not be apparent in other economic indicators until 2024, when the volume of homes under construction declines more markedly. Given these long lags, the RBA shouldn’t be waiting to see unemployment rising before pausing the increase in the cash rate.
“This month’s data does show that the value of lending for renovations and to owner occupiers and investors increased marginally compared to the previous month, contrary to the trend of the past year.
“Total new lending increased in March 2023 compared to the previous month by 4.9 per cent, to be 26.3 per cent lower than at the same time last year.
“This pick up in lending is likely to be short lived as the weight of interest rate increases continues to constrain confidence,” concluded Mr Reardon.
In original terms, the total number of loans for the purchase of construction of new homes in March 2023 declined in almost all jurisdictions compared to the same month a year earlier, led the Australian Capital Territory (-37.3 per cent), New South Wales (-36.3 per cent) and Tasmania (-33.0 per cent), followed by Western Australia (-30.6 per cent), South Australia (-29.7 per cent), Victoria (-28.0 per cent), and Queensland (-21.8 per cent). The Northern Territory saw the only increase, up by 26.1 per cent over the year.
“The number of loans issued to purchase or construct a new home remained stable in March compared to the previous month, to be 30.7 per cent lower than at the same time last year,” added Mr Reardon.
“The last time so few loans were issued for the purchase or construction of a new home was in November 2008, when the GFC caused a contraction in building.
“This data confirms that ongoing and significant declines in new home sales will see new home commencements slow significantly in the second half of 2023, under the weight of the higher cash rate.
“There are very long lags in this cycle and the full impact of the RBA’s rate increases are still to fully hit the housing market, let alone the broader economy.
“The weak lending figures observed by the ABS in March will not be apparent in other economic indicators until 2024, when the volume of homes under construction declines more markedly. Given these long lags, the RBA shouldn’t be waiting to see unemployment rising before pausing the increase in the cash rate.
“This month’s data does show that the value of lending for renovations and to owner occupiers and investors increased marginally compared to the previous month, contrary to the trend of the past year.
“Total new lending increased in March 2023 compared to the previous month by 4.9 per cent, to be 26.3 per cent lower than at the same time last year.
“This pick up in lending is likely to be short lived as the weight of interest rate increases continues to constrain confidence,” concluded Mr Reardon.
In original terms, the total number of loans for the purchase of construction of new homes in March 2023 declined in almost all jurisdictions compared to the same month a year earlier, led the Australian Capital Territory (-37.3 per cent), New South Wales (-36.3 per cent) and Tasmania (-33.0 per cent), followed by Western Australia (-30.6 per cent), South Australia (-29.7 per cent), Victoria (-28.0 per cent), and Queensland (-21.8 per cent). The Northern Territory saw the only increase, up by 26.1 per cent over the year.
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