A substantial nation-leading lift in new home lending in May in Western Australia was encouraging, the Housing Industry Association says, but it was not enough to offset falls in the previous two months of the quarter.
The number of loans for new housing for May in WA grew by 10 per cent, resulting in a 2.6 per cent loss for the quarter.
Loans for new homes in New South Wales grew by 6 per cent over May, 3.9 per cent in Queensland and 5.3 per cent in Victoria.
The HIA said, however, the number of loans for new housing fell in the majority of states and territories for the three months to May.
Over the quarter, new housing loans fell by 2.2 per cent in New South Wales, 2.3 per cent in Victoria and 1.1. per cent in Queensland.
Nationally, lending for construction posted a 6.2 per cent spike in the month of May to be down 1.1 per cent over the three months to May.
"Hopefully new home lending is finally dragging itself off the canvas, although we need much more than today's improvement to lift us from what is a chronically low level of new home lending," HIA senior economist Andrew Harvey said.
"Unfortunately, back in January new home lending shifted down yet another gear in what now looks to be a "double-dip" in home financing activity.
"New home lending in the first five months of 2011 is down by 15.7 per cent on the same five months in 2010 as the interest rate hike of November last year buffeted the confidence of potential home buyers.
"When we consider how important new home lending is as a leading indicator of residential building activity the overall profile does not bode well for home building levels in Australia.
"If the pre-GFC trend in new home lending had continued then we would be seeing lending in the order of 10,000 loans per month rather than the 6,000 or so loans we currently have."
