New home loans on the up down under

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Lending for new homes is on the up Down Under, according to new figures. The total number of loans increased by 1.2 per cent in September, according to ABS Housing Finance, while loans for new build properties jumped by 9 per cent.

But while demand for new homes appears strong, the number of loans for construction actually fell by 6.3 per cent, as the market continues its patchy performance.

Regionally, the total number of seasonally adjusted loans for the construction and purchase of new homes uncreased by 28.1 per cent in Tasmania, 5.1 per cent in New South Wales, 2.9 per cent in the Northern Territory,  2.8 per cent in Queensland, 2.1 per cent in the Australian Capital Territory and 1.6 per cent in Western Australia. The number of loans fell by 9.1 per cent in Victoria and was down by 11.8 per cent in South Australia.

 "It really was a mixed bag for housing finance outcomes in the month of September 2012," said Dr Harley Dale, Chief Economist of the Housing Industry Association. "At least some areas of finance for property are looking a little better, but a broad-based recovery is proving elusive.

"In terms of owner occupiers, there is still some growth in the first time buyer market, but the modest improvement in finance to trade-up buyers ran out of steam in the September 2012 quarter. The number of loans for the purchase of a new dwelling continues to mount an encouraging recovery, however the number of loans for construction is back to its lowest level since January."

Dale added: "The divergence extends to investor finance as well - the profile for investment lending for existing property is looking slightly better, but for new property it's at a two and half year low."

But Dale retains an optimistic outlook for the market.

"If you're financially set to do so, now is a very good time to build a home - we have a very competitive market, lower borrowing costs, and greater availability of tradespeople," he concluded. "Hopefully evidence of a broader-based recovery emerges soon."