Status of property lending in April revealed

Bruce Hockman, chief economist at the ABS, said the recent results show a slowdown in the fall of owner-occupier lending.

“The steep decline in owner-occupier lending commitments seen since late 2017 appears to be slowing, with lending for owner-occupier dwellings recording the smallest monthly fall in trend terms (down 0.5 per cent) since April 2018,” Mr Hockman said.

Across the states and territories, lending for owner-occupied dwellings over the month was stronger in NSW and South Australia.

Meanwhile, investor lending saw rises for dwellings in Tasmania, the Australian Capital Territory and the Northern Territory.

The number of loans towards owner-occupiers building new properties declined by 5.2 per cent, which is due to seasonal instability in the market, according to Geordan Murray, senior economist at the Housing Industry Association.

“A number of factors are likely to have weighed on the market activity during the month, notably the succession of holidays around Easter and ANZAC Day along with a higher degree of uncertainty as the federal election approached,” said Mr Murray.

“Softer lending in the segment is consistent with the drop in new detached house sales in the major east coast markets over recent months.

“The number of loans to owner-occupiers purchasing new homes that have already been built posted a modest lift in the month. This lift is likely to reflect settlement of multi-unit dwellings purchased off the plan as these projects reach completion.”

Analysing the overall data, Mr Reardon claimed April was yet another month that experienced a softening in home lending, predicting next month’s data unlikely to show any positivity.

“With pre-election uncertainty reaching a peak in May, we are unlikely to see an improvement next month,” he said.

“There has been a marked improvement in housing market sentiment in the weeks following the federal election. When combined with the RBA’s rate cut and the prospect that APRA may allow lenders a greater degree of flexibility in assessing loan serviceability, there is cause to be optimistic that lending activity could improve as the year progresses.”