By Robert Carry
Lending for new homes soared to a 14-year high in September as first home buyers rushed to take advantage of the First Home Owner Boost ahead of its phase down from 1 October, new figures from securities firm CommSec has revealed.
Those who entered a contract to build a new home before 30 September were eligible for a $21,000 grant. The payment was phased down to $14,000 from 1 October and will be further reduced to $7,000 from 1 January 2010.
According to Craig James, CommSec chief economist, welcomed the figures saying that any decline after the payment was reigned in would most likely be short lived.
"The lift in construction is great news for builders and the economy as a whole. More homes need to be built to house our growing population and the grant will go some of the way to ensuring that will happen," he said.
However, James warned that to sustainably plug the gap between housing supply and demand it will be up to all areas of government to reduce the costs faced by developers in advancing new projects.
The latest Economic Insight report from securities firm CommSec, showed that construction loans rose by 8.1% while the value of all loans rose by 4.8% in the month. Lending rose most significantly in Western Australia and New South Wales.
The study also revealed that the number of new owner-occupier housing loans rose by 5.1% in September - the 10th gain in 12 months.
First home buyers accounted for 26.1% of all lending in September, up from 24.7% in August. Fixed rate loans only accounted for 5.6% of all loans in September.
The average home loan across Australia stood at $269,500, up 6.9% on a year ago. Banks financed 91.5% of all home loans (by value) in September, down from 91.7% in August and the 33-year high of 92.7% set in February this year.
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