Lending to households dips again

By Kay Rivera | 15 May 2019

The value of new lending commitments to households dropped by 3.7% in March, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) figures.

This fall in lending to households follows a 2.2% rise in February. “All components of new lending to households were weaker in March, more than offsetting a bounce in lending activity seen in February,” said ABS Chief Economist Bruce Hockman.

After experiencing rises in the past month, New South Wales (-5.7%) and Queensland (-5.3%) recorded large falls in the value of lending for owner-occupier dwellings, in seasonally adjusted terms.

Lending for investment dwellings also declined further across the nation in March. The series dipped by 25.9% (seasonally adjusted) compared to March 2018. New lending for investment dwellings is at its lowest level since March 2011.

“While nationally there was a fall in the number of loans to owner-occupier first home buyers (-0.5%) in March, in a similar pattern to recent months this fall was again much less than the drop in the number of loans to owner-occupier non-first home buyers (-3.3%),” ABS said.

Lending for the purchase or construction of a new home, meanwhile, has slid to its lowest level since September 2013, according to the Housing Industry Association (HIA).

Data showed that overall housing finance commitments for the construction and purchase of new homes are now 19.4% lower than they were in July 2017.

“Market confidence fell away in the later part of 2018 as dwelling prices corrected, adversely impacting all segments of the market. Investors and owner occupiers are delaying purchase decisions, and foreign investment has also fallen dramatically for numerous reasons,” said HIA’s Chief Economist Tim Reardon. “This has resulted in the sharpest correction to building approvals since the introduction of the GST. The pipeline of building work has shrunk over the past six months as the volume of work entering the pipeline fell away.”


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