Encouraging Signs in Housing Finance

Encouraging signs for residential builders have emerged in today’s housing finance figures released by the Australian Bureau of Statistics.

Combined figures for the construction and purchase of new dwellings increased 4.1 per cent in August, seasonally adjusted. The August figure is up 10.7 per cent from the corresponding figure last year.

Chief Economist at Master Builders Australia, Peter Jones, said the figures show welcome signs of improvement for the housing industry, but should be read with some caution.

"The positive trend that has emerged in the housing finance figures is a very welcome sign, but does not herald a recovery for the sector just yet.

"The figures reveal that housing finance may have found its floor which is encouraging, but also shows that any recovery will be coming from an extremely low base.

"The industry had hoped for an earlier and sharper uplift, given substantial interest rate cuts from the Reserve Bank. The time it has taken for these cuts to have any effect shows there is still widespread new home buyer caution.

"For momentum to build, the market will need a resurgence in first home buyers and investor demand.

"With new home buyer incentives set to start in several states soon, the outlook for the sector is starting to improve. However, global economic conditions remain volatile and a setback would undo any groundwork for a recovery," Mr Jones concluded.