There were only 5,057 loans for the construction or purchase of new homes in November – the weakest month since June 2013, according to ABS’ Lending to Household and Business data for November.
“This reflects the very well broadcast housing downturn, with new housing loans over the 12 months to November 2022 down by 36.2% on the preceding year,” said Tom Devitt, HIA economist. “Investors and owner-occupiers alike are retreating from the market.”
Devitt noted that the contraction in lending took place prior to RBA’s rate hike in December and said an ongoing decline in lending was expected as the full impact of the rate rises flows through to households.
“There are long lags inherent in this cycle and the full impact of the increase in the cash rate in 2022 will not be observed until late in 2023,” he said. “The RBA has already undertaken the steepest hiking cycle in a generation, and it needs to hold fire on further hikes to give their actions to date time to play out.”
The HIA economist said putting the building industry through boom-and-bust cycles would not restore the economy to stable growth.
“As building activity slows in 2023, the RBA will be under increasing pressure to reverse course in the second half of this year,” Devitt said.
The number of loans for the construction or purchase of new homes fell in all jurisdictions in November compared to the same month in 2021. The declines were led by the Northern Territory (-58.3%), followed by the ACT (-39.7%), Queensland (-30.8%), WA (-30.3%), South Australia (-29.7%), NSW (-26.8%), Victoria (-15.2%), and Tasmania (-7.4%).
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