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Housing finance shows market remains soft

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10 October 1996

3 r d F lo o r

C o n s t r u c t i o n H o u s e

2 1 7 N o r t h b o u r n e A v e .

T u r n e r , C a n b e r r a

A C T 2601 T el: (0 6 ) 2 4 9 1433

F a x : (0 6 ) 2 4 9 1373

HOUSING FINANCE SHOWS MARKET REMAINS SOFT Statement by Wilhelm Harnisch, National Director Economics & Housing

The release of the August housing finance figures is disappointing and shows that the housing market remains very soft. The marginal increase o f 0.8 per cent in the total number of loans committed (seasonally adjusted) is largely due to the increase in refinancing.

The decrease o f 4.5 per cent in the number o f loans for the construction o f dwellings is symptomatic o f an industry bouncing along the bottom and one looking for some more positive signals in the economy to help lift it out o f its slump. The earlier reductions in mortgage rates do not appear to have had any significant impact yet on new home buyers. This indicates that home buyers confidence has not been fully restored and only adds to the imperative for a further cut in interest rates to stimulate the economy and job growth.

A minor positive in the August housing finance figures was the 1.5 per cent monthly increase in the number o f loans for the purchase o f established dwellings. Compared to the same period last year the number o f loans for established dwellings has increased by nearly 15 per cent and is a comforting sign because established housing is a leading barometer o f new building activity.

Despite the disappointing outcome o f the August housing finance figures the overall synopsis o f the housing market remains positive but soft and one which can only benefit from the further reduction in interest rates.

For further information contact:

Wilhelm Harnisch BH: (06) 249 1433 AH: (06) 288 9650

M aster Builders

Australia Incorporated A.R.B.N. 008 383 453

Incorporated in

South Australia with

limited liability