The HIA’s Affordability Report for the September quarter shows a small improvement in housing affordability… New home lending lifts in August…
Marginal lift in housing affordability: HIA
Housing affordability improved by 0.1% over the September 2016 quarter compared with the previous quarter, according to a report by the Housing Industry Association, and is 2.5% more favourable than a year ago.
“Over the past year, housing affordability has been helped by the two reductions in interest rates from the RBA. Despite not being fully passed on by lenders, these reductions have helped bring the mortgage repayment burden down a little,” says HIA senior economist, Shane Garrett.
“However, dwelling price growth remains strong in most capital cities and this has prevented affordability from improving more tangibly. Another challenge to housing affordability is presented by the fact that earnings growth in the economy is close to its weakest in two decades, making it more difficult to dilute the burden of mortgage repayments,” Garrett says.
“With direct and indirect taxation accounting for over 40 per cent of the cost of a new house in some markets, the role of progressing tax reform in order to drive better affordability outcomes can no longer be ignored.”
New home lending lifts in August
New figures from the ABS show although the number of loans to homebuyers fell in August, lending to households building or purchasing new homes went up.
The number of loans for construction rose by 3.7% in August, but down 1.7% on the level recorded year ago.
“It is pleasing to see lending in the new home market holding up in an environment where we are seeing the number of loans to home buyers easing across the housing market more broadly,” said HIA Economist, Geordan Murray.
“Looking more closely at lending for new homes, the number of loans for construction has been gradually trending down since late 2014. This segment of housing finance is closely aligned with the detached house building market and lending activity has been generally consistent with expectations given the level of detached house activity.”
Housing affordability improved by 0.1% over the September 2016 quarter compared with the previous quarter, according to a report by the Housing Industry Association, and is 2.5% more favourable than a year ago.
“Over the past year, housing affordability has been helped by the two reductions in interest rates from the RBA. Despite not being fully passed on by lenders, these reductions have helped bring the mortgage repayment burden down a little,” says HIA senior economist, Shane Garrett.
“However, dwelling price growth remains strong in most capital cities and this has prevented affordability from improving more tangibly. Another challenge to housing affordability is presented by the fact that earnings growth in the economy is close to its weakest in two decades, making it more difficult to dilute the burden of mortgage repayments,” Garrett says.
“With direct and indirect taxation accounting for over 40 per cent of the cost of a new house in some markets, the role of progressing tax reform in order to drive better affordability outcomes can no longer be ignored.”
New home lending lifts in August
New figures from the ABS show although the number of loans to homebuyers fell in August, lending to households building or purchasing new homes went up.
The number of loans for construction rose by 3.7% in August, but down 1.7% on the level recorded year ago.
“It is pleasing to see lending in the new home market holding up in an environment where we are seeing the number of loans to home buyers easing across the housing market more broadly,” said HIA Economist, Geordan Murray.
“Looking more closely at lending for new homes, the number of loans for construction has been gradually trending down since late 2014. This segment of housing finance is closely aligned with the detached house building market and lending activity has been generally consistent with expectations given the level of detached house activity.”
