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New housing finance figures released by the ABS show that the number of loans for housing has continued to decline for over eight months.
REIA president Malcolm Gunning said that the trend shows a downward trajectory in the number of owner-occupied finances.
“If refinancing is excluded, in trend terms, the number of owner-occupied finance commitments decreased by 0.6 [of a percentage point] — the ninth consecutive month since an increase,” Mr Gunning said.
Mr Gunning said that the decreases were found across the country, with only one state escaping the lending fall.
“Decreases were recorded in all states and territories except Tasmania, where lending increased by 0.3 [of a percentage point]. The largest decline of 1.9 per cent was in the ACT,” the president said.
Across the board, dwelling purchases have dropped and this is having a flow-on effect, according to Mr Gunning.
“The number of established dwellings purchase commitments decreased by 0.6 [of a percentage point] while the purchase of new dwellings decreased by 0.9 [of a percentage point] and new dwelling construction fell by 1.5 per cent.”
Mr Gunning said that the proportion of first home buyers, as part of the total owner-occupied finance commitments, remained unchanged since May at 17.6 per cent, but the dollar amount approved had dropped.
“The dollar amount approved for the purchase of dwellings by individuals for rent or resale is at the lowest level since February 2016,” the president said.
Uncertainty in the market and other mitigating factors had resulted in a conservative approach by the banks, Mr Gunning added.
“The continued decline in housing finance confirms the feedback from the market that the APRA restrictions and the fallout from the royal commission in banking have resulted in an extremely cautious approach by lenders,” Mr Gunning said.
The REIA president also cautioned about what the current trend meant for the market and the dangers that it could pose.
“We need to ensure that lending approaches reflect the market rather than set the market, which appears to be the case at the moment,” Mr Gunning said.
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