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Housing finance approvals show upward trend



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N. B rian H ow e

RELEASEDeputy Prime Minister Minister for Health, Housing and Community Services BH218/92 23 September 1992

HOUSING FINANCE APPROVALS SHOW UPWARD TREND

After strong growth in housing finance approvals during 1991-92, the rate of growth of finance approvals has, as expected, slowed in the three-month period ending July 1992, the Federal Minister for Health, Housing and Community Services, Brian Howe, said today.

, Mr Howe was commenting on figures released today by the Australian Bureau of Statistics on housing finance for owner occupation in July 1992.

In the month of July, seasonally adjusted housing finance approvals declined by 5.2 per cent to 35,707, but were 11.6 per cent above the level of July 1991.

For the three months to July 1992, total housing finance approvals were up 7.8 per cent when compared with the previous three-month period and were up 21.6 per cent when compared with the three months to July 1991.

Within total approvals for the three months to July 1992, lending for established housing (around three-quarters of total) rose by 9.3 per cent and lending for construction of new dwellings increased by 4.6 per cent.

Mr Howe noted that finance approvals have trended upwards" over the previous eight months. Monthly housing finance approvals are running at a level of around 35,000 - nearly 50 per cent above the lowest level in the last downturn of around 23,000 in December 1990.

There has been some increase in refinancing of housing loans in recent months, but this affects only the pattern of lending for established dwellings. j

"The most important leading indicator of future building activity in the private sector is the lending for construction of new dwellings," Mr Howe said.

"Finance approvals for construction of new dwellings are over 40 per cent higher than in December 1990. 1

COMMONWEALTH

PARLIAMENTARY LIBRARY MICAH --------

Minister Assisting the Prime Minister for Social Justice Minister Assisting the Prime Minister for Commonwealth-State Relations

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"On the basis of figures on building approvals and now housing finance approvals, it can be confidently stated that dwelling commencements will show another rise in private sector housing starts in the September quarter 1992.

"The actual level of dwellings commencements in 1991-92 exceeded the forecasts by the Indicative Planning Council for the Housing Industry.

"From now on, even if there is no further growth in dwelling commencements, the level of 152,000 commencements forecast by the IPC in 1992-93 will be realised."

Housing starts have risen for five consecutive quarters and are at their highest level since September 1989.

"Home purchase is now the most affordable it has been for the past seven years, and the impact of the most recent falls in home mortgage rates are yet to be fully felt," Mr Howe said.

"Homebuyers can be confident that affordability will remain a top priority under this Government."

Today's figures come on top of other indicators released this week, including the HIA Volume Builders Survey and the REIA - MGICA Home Loan Affordability Index, which show the housing recovery is bedded in and that affordability has again

improved.

"While the Government has been confident throughout the year as to the strength of the housing recovery, it is encouraging to note that those sectors of the housing industry who had not demonstrated the same confidence have now been convinced," Mr Howe said.

Contact: Ross Gardiner, Mr Howe's Office, (06) 277 7680 Andrew Edquist, DHHCS (06) 289 5325