Loans for the purchase of new homes have virtually collapsed as buyers continue to avoid the property market.
According to the Australian Bureau of Statistics, total new home lending fell for the third consecutive month – dropping 2.9 per cent in February.
Loans for the purchase of new dwellings declined by 12.0 per cent in February 2011, falling to the lowest level since September 2008.
“The ongoing deterioration in new home lending supports the Reserve Bank’s decision yesterday to hold the official cash rate steady, and it also highlights the need for execution of the widely-held expectation for an extended pause for interest rates,” HIA economist Matthew King said.
"While the heavy rainfall across the eastern states would have had a downward impact on housing finance in February, loans for new housing entered the New Year period in a position of weakness - dropping 7 per cent in the second half of 2010.”
“A rejuvenated new home building market is vital to improving the prospects of a non-resource sector domestic economy that is currently struggling. A bounce-back will not materialise without further interest rate stability together with commitment from the Federal and State governments to re-ignite the stalled policy reform process to reduce the excessive costs of new housing.”
In seasonally adjusted terms, in February 2011 the number of owner occupier loans for new housing fell by 11.7 per cent in Tasmania, 10.5 per cent in Western Australia, 9.0 per cent in the Northern Territory, 7.1 per cent in South Australia, 6.3 per cent in New South Wales, and 4.0 per cent in Victoria. The number of loans for new housing increased by 23.9