Lending for renovations is in a record slump, though new home construction loans are rising, according to new data from the Housing Industry Association (HIA).
“Renovations investment is at a ten year low and we need to see evidence of sustained improvement ahead, but that’s not yet forthcoming,” HIA chief economist Harley Dale said.
The value of loans for home alterations or additions declined by 5.1 per cent in the three months to October 2013.
However, new home constructions loans are on the rise, driven by an upswing in both the owner-occupier and investor sector.
“The upward momentum in lending for new investment property is continuing,” Mr Dale said.
Investment lending for new home builds peaked in mid-2008 before crashing in late 2009. While lending in this sector has slowly improved, levels remain comparatively low.
Owner occupier construction lending has undergone a more noticeable increase.
“The number of loans advanced for owner occupiers to construct new homes is at its highest level since March 2010,” Mr Dale said.
Lending for owner occupiers fell dramatically from 2010 to early 2011, before beginning a slow recovery to current levels.
Mr Dale also said more states were contributing to the growth in the owner occupier construction sector than in previous years.
“Six out of eight states and territories contributed to the growth in construction lending for owner occupiers,” added Harley Dale.
“This is an important tick in the box for the residential construction outlook as the first round new home building recovery in 2012/13 was narrowly driven with only two states – New South Wales and Western Australia – accounting for the bulk of the growth.”