Uncertainty about the upcoming federal election and the impact a change of government will have on property tax is leading to declining lending for housing activity, the REIA has said.
The REIA has said the February 2019 Lending to Households and Business figures released by the Australian Bureau of Statistics show that the number of loans for housing, excluding refinancing, continues to decline.
REIA president Adrian Kelly said many Australians are feeling uncomfortable about the future.
“There are a number of reasons for the continued decline in housing finance, one of which is the concern about changes to property taxation and its impact should there be a change in government,” he said.
“There is a clear risk that the decline in activity in the residential property market will become a major drag on the economy.”
Mr Kelly said the concern is well established.
“Overall, the figures for February 2019 show, in trend terms, that the number of owner-occupied finance commitments, excluding refinancing, decreased by 1.4 per cent – the 17th consecutive month of decreases and the lowest since January 2013,” he said.
“Decreases were recorded in all states and territories except Tasmania, which had a modest increase of 0.6 per cent. The largest decrease of 3.2 per cent was in the Northern Territory.”
Mr Kelly said first home buyers are also down.
“The proportion of first home buyers, as part of the total owner-occupied housing finance commitments decreased in February to 17.7 per cent from 17.9 per cent in January,” he said.
But Mr Kelly said the dollar value of lending is rising.
“The value of investment housing commitments, excluding refinancing, increased by 3.9 per cent in February [and] is 41 per cent of the June 2015 peak.”