The looming housing crunch is happening with the value of new home loans falling $2.2 billion in May, the largest fall in the history of the series.
Owner-occupier home loans have dropped 10.2% ($750 million) over the month, while investor only loan commitments fell by 15.6% ($1.4 billion) nationally, according to the Australian Bureau of Statistics.
The ABS said new home loans in the month of May fell 11.6%, driven by substantial falls in both New South Wales and Victoria, the two country’s two biggest economies.
The residential property market has experienced a significant downturn as a result of the coronavirus pandemic that has stifled property transactions, especially open houses and auctions.
Building approvals for May fell sharply – down 16.4%, pointing to future falls in construction of both private housing and apartments and lending.
Together this means there will be a long and continuing slump in homebuilding well into 2021, which is a big negative for the wider economy.
“While reduced transactions in the housing market stifled new loan activity in May, the value of existing owner-occupier loans refinanced with a different bank was by far the highest on record as borrowers responded to reduced interest rates and refinancing offers”, ABS chief economist Bruce Hockman said in yesterday’s release.
The value of new loan commitments for fixed-term personal finance rose 14.5% in May, seasonally adjusted, following a 24.8% fall in April.
“The rise in the value of new loan commitments for fixed-term personal finance was driven by a partial rebound in the value of new loan commitments for road vehicles”, Mr. Hockman said.
