Records are being broken in new home construction now, but the current slowdown in investor lending, as outlined by new ABS figures, is having a knock-on effect with a slowdown in new home construction expected in the near future.
While lending towards the purchasing of new homes has slowed down overall this year, having less investors borrowing money is impacting new home construction, said the Housing Industry Association’s (HIA) principal economist Tim Reardon.
“Less investor involvement in the market is one of the reasons why we are expecting a slowing in new home building over the next couple of years. The fall in investor activity will be more noticeable in the apartments sector,” Mr Reardon said.
“Lending to investors has fallen by 15 per cent over the past year and is a result of restrictions imposed by APRA and state governments to impede investor activity in the market.”
Despite this slowing, there is still a “significant volume” of construction work scheduled, Mr Reardon said.
“The boom in building activity experienced over recent years is still resulting in a record number of new homes being built,” he said.
“The number of new homes commenced in the March quarter of this year has kept climbing and remains at near record levels. Only once in the past 25 years have more homes been commenced (March 2001).
“We have seen a record volume of approvals for new homes over the past year and these are now translating to a record volume of homes under construction.”
Building activity is currently high along the east coast of Australia, especially in Victoria, Mr Reardon pointed out.
“Building activity in Victorian in particular is experiencing an unprecedented volume of new homes under construction. This is across detached houses and apartments and is off the back of strong economic and jobs growth,” he said.