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Housing finance numbers confirm market feedback

11 July 2018

The May 2018 housing finance figures released today by the Australian Bureau of Statistics show the number of loans for housing has continued to decline over the last eight months, according to the Real Estate Institute of Australia (REIA).

“Overall the figures for May 2018 show, in trend terms, that the number of owner-occupied finance commitments decreased by 0.7 per cent – the eighth consecutive month of decreases," says REIA president, Malcolm Gunning. "If refinancing is excluded, in trend terms, the number of owner-occupied finance commitments decreased by 0.6 per cent – the ninth consecutive month since an increase.

“In trend terms, decreases were recorded in all states and territories except Tasmania, where lending increased by 0.3 per cent. The largest decrease of 1.9 per cent was in the Australian Capital Territory."

“The value of investment housing commitments decreased by 1.9 per cent in May, in trend terms," continues Gunning. "The dollar amount approved for the purchase of dwellings by individuals for rent or resale is at the lowest level since February 2016.

“In trend terms, the number of established dwellings purchase commitments decreased by 0.6 per cent while the purchase of new dwellings decreased by 0.9 per cent and new dwelling construction fell by 1.5 per cent."

The proportion of first home buyers, as part of the total owner-occupied housing finance commitments, remained unchanged at 17.6 per cent.

“The continued decline in housing finance confirms the feedback from the market that the APRA restrictions and the fallout from the Royal Commission into Banking have resulted in an extremely cautious approach by lenders,” says Gunning.

“Loan applications are now being scrutinised for real costs of living, including outgoings such as school fees and use of credit cards. At the same time, an ultra conservative approach is being taken by banks with their valuations which means funds available are below purchaser’s expectations.
“We need to ensure that lending approaches reflect the market rather than set the market, which appears to be case at the moment.”