State bucks lend trend

TASMANIA is the only state where lending for the purchase of a new home increased last year as the mainland housing market cooled and banks tightened their lending criteria.

The latest Australian Bureau of Statistics figures for December 2018 show lending to home buyers to both owneroccupiers and investors con- tinued to slow in all states and territories except the ACT and Tasmania.

In Tasmania, housing finance commitments for the purchase or construction of new dwellings increased by 4.2 per cent over the 12 months from December 2017. The ACT was up by 4.4 per cent.

HIA Tasmania executive director Stuart Collins said while home lending was weakening in other parts of Austra- lia, and in Melbourne and Sydney in particular, this state’s real estate sector continued to be a “good news story”.

“It is not just lending that is up but also population growth and building approvals, which climbed by 13 per cent in Hobart between December 2017 and the end of last year,” Mr Collins said.

“Consumer confidence and pent-up demand is driving that growth along with investors from the mainland. We estimate another 2300 more homes will be needed in Hobart to ease that demand.”

HIA principal economist Tim Reardon said the drop in loans in other states had caused the building market to cool.

“Housing finance commitments for construction and purchase of new homes declined by 3.4 per cent in December 2018 to be 13.4 per cent lower than at the same time in 2017,” Mr Reardon said.

“The slowdown in the market began with restrictions imposed by APRA [Australian Prudential Regulation Authority] on investors several years ago and has been exacerbated with tighter lending conditions imposed by banks during 2018.

“Lending to investors is now 47.8 per cent lower than at its peak in April 2015.

“This decline in investor ac- tivity will turn around quickly when home prices stabilise.”

Around the nation, lending to owner-occupiers building and purchasing new homes in the December 2018 period was down 6.7 per cent from the previous year in NSW, down 12.6 per cent in Victoria, down 22.8 per cent in Queensland, down 4.4 per cent in South Australia, down 8.4 per cent in WA and down 14.0 per cent in the Northern Territory.