Home lending approvals increase slightly
Those considering property investment in Australia may be encouraged by recent home lending approvals in the real estate market.
Figures from the Australian Bureau of Statistics report a national average rise in the number of home lending approvals for the March quarter.
This means industry confidence is building, which may support further improvement as the year progresses.
The Housing Industry Association (HIA) commented that the increase, while modest, was a positive sign for the sector.
“The number of loans for the construction or purchase of new homes lifted by 3.5 per cent in the month of March, which is a welcome piece of good news given the existing weak conditions facing the new home building sector,” said HIA senior economist Andrew Harvey.
“However, while the 50 basis point rate cut was the correct call, more is needed in terms of further rate cuts and also housing supply reform by the state and Federal governments,” he added.
Lending for the construction of new dwellings was relatively flat with a 0.2 per cent rise, indicating a lull in the building industry.
Slow construction growth may contribute to a future housing shortage that would have an impact on affordability and rental prices.
“We need to keep in mind that new home lending figures show that there are around 2,000 fewer loans each month than there would have been if the longer-term pre-GFC [global financial crisis] trends in housing finance had continued.”
However, the decision by the Reserve Bank of Australia to cut the official cash rate to 3.75 per cent has been embraced in part by lenders, which could lead to further activity in the industry.
The benefits of the interest rate reduction to the sector cannot be accurately measured until the next quarter.
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