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$vuetify.icons.faPhone1300 650 620

Election uncertainty disguises new home building momentum heading into 2025

Media release

Election uncertainty disguises new home building momentum heading into 2025

Media release
“Lending for the purchase or construction of new homes remained flat in the first quarter of 2025, likely the result of election uncertainty. The data also reflected the situation prior to the effect of the RBA’s first interest rate cut,” stated HIA Senior Economist Tom Devitt.

The ABS released the Lending Indicators data for the March quarter 2025 today, which provides the latest statistics on housing finance commitments.

“There were 91,790 loans issued in the 12 months to March 2025 for the purchase or construction of new housing across Australia, 8.5 per cent greater than the previous year,” added Mr Devitt.

“Investors have been leading the improvement in new home lending activity, with a 14.1 per cent increase in loans over the last 12 months, compared to a 4.9 per cent increase in owner occupier loans.

“It is typical following a trough in housing activity that investors return to the market before confidence spreads to owner occupiers – and confidence is returning.

“Ongoing strong population growth, low unemployment rates and recovering household incomes have seen an increasing number of Australians return to the market.

“The home improvement trend also looks to be making a comeback, with the number of loans for renovations up by 3.9 per cent on the same quarter last year, and over one-third greater than the levels in 2019.

“Elections can easily create consumer uncertainty around major spending decisions like new home purchases, especially elections where housing policy is front and centre.

“With the election behind us and the RBA expected to deliver this cycle’s second interest rate cut next week, more Australians are likely to return to the market and sign that contract for a new home build.

“The outlook for renovations activity continues to be supported by a number of positive fundamentals, including ageing dwelling stock, the ongoing desire for home improvement, repairs from extreme weather events, and affordability issues in the new housing market.

“The strength of the coming home building cycle will depend on the ability of each state and territory to prepare a pipeline of affordable shovel-ready land to meeting housing needs.

“If the Albanese government wants to achieve its target of 1.2 million new homes over five years, significant reforms are required.

“A few interest rate cuts won’t produce the kind of home building volumes that Australia needs,” concluded Mr Devitt.

The Northern Territory has been leading the improvement in lending for new homes, up by 50.6 per cent compared to the previous year, followed by South Australia (+22.0 per cent), Western Australia (+20.1 per cent), Queensland (+15.0 per cent), the Australian Capital Territory (+6.2 per cent), New South Wales (+2.9 per cent) and Victoria (+0.9 per cent). Tasmania saw the only decline, down by 2.7 per cent.

Source: ABS

For more information please contact:

Thomas Devitt

Senior Economist

Tim Reardon

HIA Chief Economist
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