New home lending eases in January

During January, the total number of owner occupier loans for the purchase or construction of new homes fell by 1.0 per cent and was 0.4 per cent lower than a year earlier.

Similarly, the volume of loans for new home purchases declined by 0.3 per cent during January, with lending for the construction of new dwellings dipping by 1.4 per cent.

However, despite the reduction, Housing Industry Association senior economist Shane Garrett emphasised: “The actual volume of loans for new homes remains at a very elevated level – about 99,620 loans were made over the year to January 2017.”

He explained: “There are two dynamics going on with respect to new home loans. With 2016 representing the strongest year for new dwelling starts since the end of WWII, a huge number of new homes are now becoming available for purchase making lending volumes in this area accordingly high.

“However, the number of loans to people constructing their own home has actually been falling back since mid-2014 and this trend has affected overall lending activity.”

In January, the number of loans to owner-occupiers constructing or purchasing new homes increased in three states.

Compared with January of last year, Queensland saw the biggest rise in volume of loans (13.1 per cent), followed by South Australia (9.2 per cent) and Victoria (8.8 per cent).

Meanwhile, Western Australia posted the largest reduction (-9.3 per cent), followed by Tasmania (-3.5 per cent) and NSW (-1.2 per cent).

The volume of lending rose by 22.1 per cent in the ACT, while dropping by 54.8 per cent in the Northern Territory.

[Related: Boost in new home lending]