Australasian Timber

Sales increase but new lending restrictio­ns will hit homebuyers

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SALES of new detached houses increased by 2.3 per cent in September compared to the previous month.

The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home constructi­on.

Detached building approvals also rose in August 2021, suggesting there is still strong demand for housing despite the end of stimulus measures in March.

“It has been over six months since the end of HomeBuilde­r in March 2021 and sales have remained resilient,” HIA Economist Tom Devitt said.

In the six months from April to September, New Home Sales were 9.3 per cent above the same period in 2019 and 0.8 per cent above the same period in 2018.

“On a quarterly basis too, the last three months were up by 7.4 per cent and 0.6 per cent on the same quarters in 2019 and 2018, respective­ly,” Mr Devitt said.

“These are the best years for comparison, rather than 2020, as they predate both the pandemic and the HomeBuilde­r stimulus.

“These relatively strong sales will ensure that the boost in home building flows through to the second half of 2022. When combined with the ongoing strength in renovation activity the home building sector will continue to pull the economy forward for at least the next year,” he said.

“This will continue to see high demand for skilled trades and ongoing employment opportunit­ies in the sector into the second half of 2022.”

However a major impact could come from the Australia Prudential Regulation Authority (APRA) which has announced a plan to tighten its regulation­s on banks and lenders to cool the property market.

Many economists and brokers have voiced concerns that first-home buyers will be pushed even further out of the housing market.

Tim Reardon, chief economist of Housing Industry Associatio­n, said that more than 90% of renters want to own a home, but APRA’s decision will make it even harder for aspiring homeowners to achieve this.

“Australia has an unquestion­ably strong financial sector. It has withstood significan­t shocks, such as the Global Financial Crisis and the COVID recession, without the emergence of financial contagion,” Mr Reardon said. “The share of loans that are impaired is exceptiona­lly low, at around 0.4% of all loans issued. This is significan­tly lower than in other developed economies.”

In the six months to September 2021, Western Australia led the pack, up by 46.3 per cent compared to the same period in 2019, followed by New South Wales (+34.6 per cent), Queensland (-0.8 per cent), Victoria (-6.1 per cent) and South Australia (-13.4 per cent).

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