Housing finance results released yesterday show stronger than expected growth in the lending sector.
Figures released by the Australian Bureau of Statistics (ABS) showed the number of dwelling commitments for owner occupied housing in June rose 1.3 per cent on-month, seasonally adjusted. Finance for the number of new dwelling being built was also higher, up 4.9 per cent on-month, as was the number of new dwellings purchased, which jumped 9.7 per cent from May.
The total value of lending rose 2.4 per cent on-month, seasonally adjusted, to $20.724 billion.
First home buyer numbers also increased to make up 18.3 per cent of borrowers, up from 17.8 per cent in May.
The Housing Institute of Australia (HIA) said the ABS numbers were a good sign, however senior economist Andrew Harvey believed a stronger rate of recovery is needed.
“Following relatively weak data in May, the number of loans for the construction or purchase of new homes rose by 6.3 per cent in the month of June,” said Mr Harvey.
“The outcome is encouraging, but the reality is that new home loans have been grinding higher over the past six months rather than mounting a sustained and significant recovery,”
“Unfortunately we needed to see a much stronger recovery in new home lending coming through in the first half of 2012 to signal a significant turnaround in residential construction.
“Across loans for new and established property there has been a modest increase for both first time buyers and trade-up buyers over the last year, although its from a relatively low base,” added Mr Harvey.
The HIA believe the outcome was driven by solid lending figures in New South Wales and Victoria, which grew by 7.3 per cent and 11.3 per cent respectively which they attribute to policy changes in these two states.
Real Estate Institute of Australia (REIA) president Pamela Bennett said the figures show there’s been little response to the interest rate cuts of May and June.
“These housing finance data indicate the RBA should have reduced interest rates yesterday as the market has not responded to the two previous cuts. The message for next month’s RBA meeting is abundantly clear,” Ms Bennett concluded.