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The ABS released the Lending Indicators data for the month of August 2024 today, which provides the latest statistics on housing finance commitments.
“This increase in lending comes off a very low base, with lending for new home purchase and construction remaining about the lowest levels since 2002,” added Mr Reardon.
“Market confidence in new home building has been improving with a pause in interest rate changes for eleven months, low levels of unemployment and an acute shortage of housing.
“First home buyers are increasingly active as buying a home provides protection from the acute shortage of rental homes. The Government should be looking at removing the restrictions that prevent many first-time home buyers from getting a loan.
In its recent submission to the Senate inquiry into the financial regulatory framework and home ownership, HIA identified that a decade of additional costs has restricted competition among banks and made it increasingly expensive for them to lend to first home buyers.
“A decade of increased prudential restrictions has reduced competition among banks and added additional barriers to first home buyers gaining access to a loan.
“HIA has recommended that the Government should establish an RBA-style Board to oversee APRA to balance the goals of financial system stability and homeownership.
“This should include a RBA style target for mortgage arrears.
“Just as zero inflation is not the RBA’s goal, zero mortgage arrears is an unattainable and undesirable goal for APRA.
“Mortgage arrears in Australia have remained exceptionally close to zero, even though the GFC and the pandemic. Yet, APRA continues to impose additional constraints on lending, competition among banks and thereby restricting housing supply.
“The problem is that ongoing regulations have forced banks to eliminate much of the flexibility and competition in the mortgage market that made home ownership accessible for households with variable access to capital, such as first home buyers.
“Ensuring that home ownership remains an attainable goal for Australian households is an equally important objective that has not received adequate recognition among financial regulators.
“Banks should be making the decision on who is able to service a mortgage, not the Australian Government. Banks are well placed to make this assessment and are protected from delinquency through mortgage insurance,” concluded Mr Reardon.
The number of owner-occupier loans issued for the purchase or construction of a new home in the three months to August 2024 increased by 34.4 per cent in the Northern Territory (from a very low base), followed by Western Australia (+27.1 per cent), the Australian Capital Territory (+26.8 per cent), Queensland (+24.8 per cent), South Australia (+16.8 per cent) and Tasmania (+3.0 per cent). The two largest states recorded a decline over the same period, led by Victoria (-5.2 per cent), followed by New South Wales (-3.7 per cent).
Additional data:
To have any hope of delivering the quantity of new homes desperately needed in Queensland to address not only the current housing shortage but demand into the future, we need all sectors of the home building industry to be firing.
HIA provided feedback to the Department of Housing and Public Works on this reform which if implemented correctly will streamline the delivery of new houses, remove unnecessary approval costs and improve housing affordability.
“The Housing Industry Association (HIA) welcomes the federal government’s announcement of a new $900 million National Productivity Fund, aimed at driving productivity-enhancing reforms across the states and territories,” said HIA Managing Director, Jocelyn Martin.
HIA refers to the Draft Work Health & Safety Amendment (Silica Worker Register) Regulation 2024 recently released by SafeWork NSW and associated Silica Worker Consultation Paper.