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More people have committed to new home loans, as the latest Australian Bureau of Statistics (ABS) figures revealed an increase of 2 per cent in October.
“New loan commitments for housing showed further strength in October, with the series up by 15.2 per cent on the most recent trough in May 2019. Recent growth continues to be driven by new commitments for owner-occupier housing, which rose by 2.2 per cent in October, the fifth consecutive monthly increase,” ABS chief economist Bruce Hockman said.
The Housing Industry Association (HIA) believes this is further evidence that a low point was reached in April and May 2019, and it has slowly improved since.
“Lending for the purchase or construction of a new home rose by 3.4 per cent in October. Despite the improvement, lending remains 3.4 per cent lower than in the three months to October compared with the same time in 2018,” HIA chief economist Tim Reardon said.
“The housing market contracted very sharply from the middle of 2018 but has since experienced a small rejuvenation. Lending data and new home sales data both suggest that the market has improved since the middle of 2019.”
HIA has noticed first home buyer activity has remained strong despite the increase in house prices, with their commitments up by 1.4 per cent in October.
First home buyers also accounted for nearly 30 per cent of all buyers.
“Stimulus measures — including interest rate cuts, tax cuts and the easing of APRA’s lending restrictions — are having a positive impact on the housing market. The government’s First Home Loan Deposit Scheme will also assist eligible first home buyers enter the market from January,” Mr Reardon said.
“If these conditions remain, the market will stabilise during 2020, at levels well below those experienced in recent years.”
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