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$vuetify.icons.faPhone1300 650 620

New home lending remains at record low levels

Media release

New home lending remains at record low levels

Media release
“The number of loans issued for the purchase or construction of a new home over the past year, remain at their lowest level in more than two decades,” stated HIA Chief Economist Tim Reardon.

The ABS released the Lending to Households and Businesses data for February 2024 today, which provides statistics on housing finance commitments.

“The number of loans issued for the purchase and construction of new homes increased by 3.6 per cent in February compared to the previous month,” added Mr Reardon. 

“Despite this rise, lending to build and purchase a new home remained 3.6 per cent lower in the three months to February 2024 than at the same time last year.

“This is a deeper and more sustained downturn in lending for home building than any other period observed in the past 20 years. 

“This low level of lending is consistent with other leading indicators of home building activity, such as new home sales and building approvals, which continue to signal an ongoing slowing in the volume of homes commencing construction. 

“The rise in the cash rate is the primary cause of this poor result in new home lending. Higher interest rates are compounding the impact of the rise in the cost of construction caused by elevated land, labour and material prices. 

“This is further exacerbated by macroprudential rules that remain overly restrictive.

“The slowing in lending is most evident in the largest states of New South Wales and Victoria. Since interest rates were raised in May 2022, new home lending in these two states have fallen by more than one-third.

“The slowing in home building activity appears set to continue and will drag on economic growth through the rest of this year," concluded Mr Reardon.

In original terms, the total number of loans issued in the three months to February 2024 for the construction or purchase of new homes rose in Western Australia by 28.2 per cent compared to the previous year, followed by South Australia (+6.7 per cent) and Queensland (+0.5 per cent). The other jurisdictions saw declines in new home lending compared to the previous year, led by the Northern Territory (-34.3 per cent), followed by Tasmania (-31.8 per cent), the Australian Capital Territory (-27.9 per cent), New South Wales (-12.4 per cent), and Victoria (-5.9 per cent).

Lending for purchase and construction of a new home

Source: ABS Housing Finance

For more information please contact:

Tim Reardon

HIA Chief Economist

Thomas Devitt

HIA Senior Economist
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