New homes remain a popular choice

The-City-of-Sydney-is-trying-to-solve-the-affordability-riddle-_157_6006719_0_14102526_300Property buyers throughout the country are keen to buy new homes, the latest figures suggest, which has been spurred on by reductions to the official cash rate (OCR).

The Reserve Bank of Australia (RBA) first lowered the OCR to 2.25 per cent in February, which was followed by another 25 basis point cut this month. As a result, homebuyers have been keen to make the most of the low interest rate environment and buy property while borrowing rates are down.

Figures from the Australian Bureau of Statistics (ABS) show that lending to investors for new houses during the March quarter of 2015 was 16.4 per cent higher than 12 months ago. This was buoyed by the RBA’s cash rate cut – and the effect of the latest reduction is still yet to be seen.

Economist at the Housing Industry Association (HIA) Diwa Hopkins said new home lending may have reached its peak late last year, but there are nevertheless still reasons to be optimistic.

“Lower lending rates have been a vital element to new home building activity and the now-crucial role it is playing in supporting the broader domestic economy,” she commented.

HIA analysis of the data showed that New South Wales was among the states with the greatest increase in approvals. The number of owner occupier loans was up 2.7 per cent from the March 2014 quarter.

The group is now calling for changes to legislation that will drive further investment in the property market, which should ultimately bring down prices for buyers.

ABS data shows that in trend terms, the number of loans for the purchase of existing properties increased 0.7 per cent between February and March. There was a slight decline in first-time buyer numbers, which fell from 15.1 per cent in February to 14.7 per cent the following month.

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