Owner occupied lending slumped by four per cent in February, which is the biggest drop since early 2010 according to new Australian Bureau of Statistics figures.
However the Housing Institute of Australia claimed the results are only “marginally worse” than what people were expecting.
“There seems to be some evidence of renewed deterioration indicators in the housing and commercial sectors in 2012,” HIA Senior Economist Harley Dale told Smart Property Investment. “There’s still a lot of uncertainty out and about in the domestic economy.”
Mr Dale also attributed the dip to consumer sentiment nose-diving after banks raised rates out of cycle from the Reserve Bank.
“There’s a lot of uncertainty with what’s going to happen to interest rates and banks moving independently of central banks which is fuelling that uncertainty.
There’s a mood out there at the moment that is adding to the fact that people are more inherently cautious now than before the GFC.”
And things are going to get worse before they get better, with Mr Dale claiming a lot of indicators are pointing towards a declining market.
“There are still some question marks over how robust Australia’s labour market is, despite the report last week suggesting it was more positive.
“There’s a raft of measures out there that suggest things are going to continue to weaken.” Mr Dale said.