Surging house prices drive down demand

Surging house prices drive down demand

by 0 comments

Inflated house prices and rising interest rates have contributed to the seventh consecutive drop in home loans.

According to the Australian Bureau of Statistics, housing finance for owner-occupiers fell by a seasonally adjusted 1.8 per cent in April.

Just 47,669 loans were written - the smallest number in any month since March 2001.

The Housing Industry Association's senior economist Ben Phillips said that without the government support and low interest rates observed in 2009, the new housing market was looking decidedly unhealthy.

"A sustainable recovery in residential construction is looking increasingly unlikely amidst a debilitating confluence of higher interest rates, tight credit availability, and obstacles related to land supply, planning, and infrastructure charges and taxation," Mr Phillips said.

Over the three months to April, first home buyer loans fell 51.4 per cent, while trade up buyers fell 8.6 per cent.

"The large pull forward in first time buyers in 2009 has predictably been replaced by a sharp contraction in numbers. However, upgrade buyers are simply not entering the market in sufficient numbers to provide the necessary net boost to generate a sustained housing recovery," Mr Phillips said.

"The only bright spot in this release is that investment loans for new housing increased 9.1 per cent over the month, assisting total investment to increase by 1.3 per cent."

Inflated house prices and rising interest rates have contributed to the seventh consecutive drop in home loans.

According to the Australian Bureau of Statistics, housing finance for owner-occupiers fell by a seasonally adjusted 1.8 per cent in April.

Just 47,669 loans were written - the smallest number in any month since March 2001.

The Housing Industry Association's senior economist Ben Phillips said that without the government support and low interest rates observed in 2009, the new housing market was looking decidedly unhealthy.

"A sustainable recovery in residential construction is looking increasingly unlikely amidst a debilitating confluence of higher interest rates, tight credit availability, and obstacles related to land supply, planning, and infrastructure charges and taxation," Mr Phillips said.

Over the three months to April, first home buyer loans fell 51.4 per cent, while trade up buyers fell 8.6 per cent.

"The large pull forward in first time buyers in 2009 has predictably been replaced by a sharp contraction in numbers. However, upgrade buyers are simply not entering the market in sufficient numbers to provide the necessary net boost to generate a sustained housing recovery," Mr Phillips said.

"The only bright spot in this release is that investment loans for new housing increased 9.1 per cent over the month, assisting total investment to increase by 1.3 per cent."

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
Tim Foote on why quality over quantity is good for business

In this episode of Secrets of the Top 100 Agents, host Tim Neary talks to Belle Property’s Tim Foote, who placed number 34 in this year’...

View all podcasts

How difficult is it to maintain a good work/ life balance?

Very – if I’m having balance my competitors are working
Not – I schedule the time into my calendar in advance
A little – It’s scheduled, but something always crops up
Work/ life balance – what’s that?
Do you have an industry update?