Housing finance continued its slowdown in January, which has dragged on from the final quarter of 2018, analysis of new ABS data has found. Conditions are expected to continue, but not for much longer.
Tim Reardon, chief economist of the Housing Industry Association, has said that lending towards the purchase of new property has slowed faster over January than its slowdown over the last quarter of 2018.
According to data from the ABS, new lending for investment dwellings declined by 4.1 per cent over January 2019, and is also down 28.6 per cent compared to January 2018.
“Housing finance commitments for construction and purchase of new homes declined by 3.0 per cent in January 2019 to be 19.2 per cent lower than at the same time in 2018,” Mr Reardon said.
“After five years of a sustained building boom, market confidence fell away in the later part of 2018 as dwelling prices corrected, adversely impacting all segments of the market.
“Investors and owner-occupiers are delaying purchase decisions and foreign investment has also fallen dramatically for numerous reasons.”
Last year’s credit squeeze worsened the home building market, and Mr Reardon said this is expected to be felt during the first half of 2019.
“We expect that this credit squeeze will ease toward the middle of 2019. If the leading indicators do not improve by mid-year, then the pipeline of building work will be exhausted rapidly,” he said.
“The home building industry has driven economic growth in Australia since the end of the resources boom.
“As the housing boom cools the industry will be reliant on a strong national economy to ensure that this is a relatively shallow downturn.”