Healthy lending figures reveal buoyant construction levels

Lending-for-building-new-homes-increased-in-December-_157_6003836_0_14100824_300A useful way for investors and prospective buyers to measure the strength of the property market is to review the level of activity in the lending sector. If recent data from Australian Bureau of Statistics is anything to go by, home building will continue to follow its upward trajectory in 2015.

The figures show that in the final month of 2014 the number of dwelling construction loans to both investors and owner occupiers increased, with loans to the latter category climbing by 0.8 per cent over the 12 months to December. As well, the final quarter saw owner occupier commitments rise to a level 9.8 per cent higher than the same quarter in 2013. Similarly, new home lending leaped an impressive 44.2 per cent over December, with the total value over the quarter climbing 16 per cent.

However, there was a bit of variance across categories, with lending to purchase newly established houses down by 1.8 per cent during December, culminating in a overall drop of 4 per cent over the final quarter.

Housing Industry Association Economist Diwa Hopkins said investors are clearly pinning new home building as the sector to target, a very encouraging sign for the residential construction industry in 2015.

“Housing construction loans, in both the owner occupier and investor segments of the market, finished 2014 on a strong note. This provides a very positive signal for activity in the residential construction sector in 2015,” she said.

“Investors are likely to continue playing a key role in adding to the stock of new housing in 2015. The owner occupier side of the market, however, appears to be losing some momentum.”

The Australian property market is clearly reaping the rewards of improving construction activity, signaling a shifting tide of demand towards new builds among buyers and renters. With the New South Wales property market showing the strongest growth of all states, there are clear opportunities for prospective investors to ride this wave of construction successfully. Contact your local real estate agent if you would like to know more about investing in new builds.

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