A modest improvement in home lending in April has done little to help a struggling sector in desperate need of short-term stimulus, the new home building industry says.
A modest improvement in home lending in April has done little to help a struggling sector in desperate need of short-term stimulus, new home building industry bodies say.
Australian Bureau of Statistics housing finance numbers today showed a 2.9 per cent rise in the number of loans for construction or purchase of a new dwelling in April.
Lending to investors remained largely flat, falling 1.6 per cent in value terms in April, leaving the value of investor housing loans down 11.1 per cent so far this year.
In seasonally adjusted terms, the number loans for new housing in the month of April 2011 improved by 4.3 per cent in Western Australia, 2 per cent in New South Wales and was up by 3.8 per cent in Victoria, 9.3 per cent in South Australia, 13.3 per cent in Tasmania, 18.0 per cent in the Northern Territory, and 30.4 per cent in the Australian Capital Territory.
Queensland was the exception to the broad-based monthly improvement where loans fell a further 5.7 per cent.
It was a different story over the three months to April 2011 where in seasonally adjusted terms the number of owner occupier loans for new housing fell across all states and territories.
New housing loans fell by 11.9 per cent in New South Wales and were down by 13.1 per cent in Victoria, 3.7 per cent in Queensland, 9.1 per cent in South Australia, 8.1 per cent in Western Australia, 6.1 per cent in Tasmania, 5.8 per cent in the Northern Territory, and 9.8 per cent in the Australian Capital Territory.
"While a better result, it falls well short of preventing a weak three month period, with loans down by 10 per cent over the (three months) to April 2011," Housing Industry Association chief economist Harley Dale said.
"A downward trend in new home lending has generally persisted since late 2009 and a range of leading housing indicators point to further weakness in new home building activity in the 2011/12 financial year.
"That's hardly a recipe for an up-beat non-resource sector economy."
Master Builders Australia chief economist Peter Jones said the bounce in home finance in April may be a precursor to a "much needed" housing recovery, but only if consumer confidence is buoyed by stable interest rates.
"One positive housing finance number after a run of negatives has a lot to do with the timing of weather events although seven months of interest rate stability may also be working to ease household caution," Mr Jones said.
"For the residential building industry, finance for 'new' dwellings remains soft and investment lending fell in the month."
"Loans for construction of dwellings and purchase of new dwellings, combined, were up 3 per cent in April but are still down 10 per cent on a year ago as the flow through of higher interest rates works against an upswing in residential building."
Mr Jones said the numbers showed the declines suffered in 2009-10 had been arrested, but warned the pace of recovery would be slow.
"Still suffering lingering effects of the credit squeeze, the interest rate sensitive residential building industry is relying on an extended pause in Reserve Bank monetary policy to shore up consumer confidence and encourage an upswing in housing commitments," he said.
"In an overarching sense, the weak underlying level of housing finance must be of concern to the Federal Government, as it signals that the residential building industry will be unable to meet the serious undersupply of housing that has arisen, thereby risking higher rents and house prices as more people chase less stock.
"There is an urgent need for governments of all persuasion to address supply side policy failures, otherwise there will be dire consequences for housing affordability."
