Figures released by the ABS in July show encouraging signs for the property market, with the number and value of loans increasing in May. This is great news after two months of negative growth across the sector.
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“Construction loans, the principal component of new home lending, are at their highest level in over four years and new dwelling commencements are on track to hit their second highest level on record in 2014,” Dr Dale said.
“With low interest rates and the recurrence of capital gains, there is the opportunity for the alts and adds market to gather upward momentum,” he said.
REINSW President Malcolm Gunning said these figures show that the demand in the market will be met sufficiently.
“What we are seeing now, after many years, is the supply is finally starting to match the demand,” Mr Gunning said.
“This means, we will see a stabilisation in prices allowing purchasers a bit more flexibility and choice in the market,” he said.
Director of Loan Market Mark De Martino said the increase in May was 4.57 per cent higher than the same month last year, which demonstrates how competitive the market for home loans is.
“The Reserve Bank of Australia would be monitoring ABS home loan approval numbers closely and these results would likely strengthen their position to keep interest rates low for the foreseeable future,” Mr De Martino said.
“The record low cash rate is certainly fuelling segments of the market but with only one rate cut in the past 12 months, it’s impressive to see the market growing with the absence of lowering interest rates.
“The RBA’s wait-and-see approach for interest rates appears to be working and it’s clear that interest rates are exactly where they need to be to keep homeowners and buyers active in the market.”
Over the three months to May 2014 HIA’s seasonally adjusted estimate shows an increase in the number of loans for new housing in: New South Wales (+2.1 per cent); Victoria (+0.6 per cent); Queensland (+7.6 per cent); Western Australia (+8.0 per cent); and Tasmania (+13.8 per cent).
Over this three month period the number of new housing loans fell by 4.4 per cent in South Australia, 9.9 per cent in the Northern Territory, and by 12.4 per cent in the Australian Capital Territory.
Content cross posted from REINSW http://www.reinsw.com.au/Home-loan-approvals-grow/default.aspx
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