The number of loans for the building of new homes in Australia is rising but the sector is still weak, according to the Housing Industry Association.
Figures from the Australian Bureau of Statistics shows that loans for the construction of new homes increased by 2.1% in April, the second consecutive monthly rise in new home lending.
But the organisation, which represents Australia’s residential building industry says that the required strong recovery remains elusive.
‘The number of loans for the construction or purchase of new homes increased by 2.1% in April following a 3.8% rise in March. Given contemporary weakness in new home construction activity, it is encouraging to see a second consecutive, albeit modest rise in this leading housing indicator,’ said HIA chief economist Harley Dale.
‘The number of loans for new housing has largely been bouncing along a bottom for over a year now, but hopefully that situation is coming to an end,’ he pointed out.
‘The National Accounts update last week signalled new housing as the weakest sector in the Australian economy. We need to be seeing a strong recovery across all leading indicators to avoid the prospect of housing activity falling throughout 2012. We perhaps have the makings of a mild recovery with housing finance, but there is no evidence elsewhere,’ he explained.
‘Lower interest rates are providing a stepping stone towards turning around new home building activity. The onus, however, is on governments to act in terms of investment and policy reform to boost new housing supply,’ he added.
The association believes that boosting housing supply is an economic and social imperative and requires immediate action to lift new home building and therefore restore confidence, a reduction in excessive taxation, increased infrastructure investment and a framework to increase access to finance for residential development.
The total number of seasonally adjusted loans for construction eased by 0.6% in April 2012 but was up by 4% over the three months to April. Lending for the purchase of a new dwelling increased by 9.3% in April, but was still down by 4.4% over the three month period.