“In contrast to the lift in headline owner occupied commitments, lending to build new dwellings was muted in December however finance flows will continue to underpin resurgence in residential building,” Peter Jones Chief Economist of Master Builders Australia said.
Data released by the ABS show the total number of owner occupied housing finance commitments was up a seasonally adjusted 2.7 per cent in December. Commitments for construction rose by 0.8 per cent but those for purchase of new dwellings fell by -1.8 per cent resulting in combined ‘new’ commitments being unchanged over the month.
“Builders will be reassured by the 8.7 per cent rise in owner occupied commitments for ‘new’ dwellings in calendar year 2014 compared to the previous year, another healthy annual increase following strong increases in 2013 and 2012,” he said.
“Investor housing commitments for the construction of dwellings rose sharply in December, with the total for calendar year 2014 up 17 per cent on 2013.”
“Yet to be reflected in the data, the Reserve Bank’s decision to cut interest rates in February will flow through to the housing market working to release pent-up demand and providing a further boost to residential building activity,” Peter Jones said.