Housing market confidence is steadily improving, with new data showing a 9.1% increase in home loans for the purchase and construction of new homes in the three months to August compared to the previous year.
“This increase in lending comes off a very low base,” said Tim Reardon (pictured above), HIA chief economist, adding that lending levels are still near their lowest since 2002.
The August Lending Indicators report, released by ABS, highlighted these developments in Australia’s housing finance commitments.
First-home buyers have been notably active in the current housing market, driven by a need to escape the rental crisis.
Reardon stressed that owning a home is increasingly seen as protection against the severe shortage of rental properties. However, barriers remain, especially for first-time buyers.
HIA’s submission to the Senate inquiry outlined how regulatory costs and banking competition constraints have made it harder for first-time buyers to secure loans.
Reardon said that increased prudential restrictions over the last decade have limited competition among banks, making it more difficult for first-home buyers to access financing.
“A decade of increased prudential restrictions has reduced competition among banks and added additional barriers to first home buyers gaining access to a loan,” he said.
HIA, which recently launched a new project which aims to identify and address the regulatory barriers affecting the use of prefabricated and modular construction methods in residential housing, is advocating for the government to establish an RBA-style board to oversee APRA and ensure that homeownership remains attainable, suggesting a mortgage-arrears target similar to the inflation target used by the RBA.
While the two largest states, Victoria and New South Wales, saw declines in the number of new home loans issued, other regions experienced significant growth.
The Northern Territory led with a 34.4% increase in loans, followed by Western Australia (+27.1%) and the ACT (+26.8%).
Despite a slight monthly decrease of 0.5%, lending for new homes remains up by 9.1% compared to the previous year.
Investor lending saw a 4% decline in August yet remained 5.5% higher for the three-month period compared to the previous quarter.
Although investor loans for new home construction dropped by 10.6% in the month, investor lending in the three months to August was still 24.6% higher than the same period in 2023. This reflects growing, albeit cautious, investor confidence in the market.
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