Media Release
9 July 2008
STEEP DECLINE IN HOME LENDING
Statement by Peter Jones, Chief Economist
Another big drop in home lending in May is the fourth consecutive monthly decline as
consumers take fright in the wake of higher interest rates and petrol prices, according to peak
building and construction industry organisation Master Builders Australia.
Mr Peter Jones, Master Builders’ Chief Economist, said “Tighter financial conditions coupled
with the high cost of fuel is affecting consumer sentiment and having a significant impact on
home buyers.
“Loans for construction or purchase of new dwellings, combined, have fallen by more than 20
per cent over the past year as weaker demand and the credit squeeze take their toll.
“From a position of strength, Queensland’s housing market appears to have ‘hit the wall’, with
loans down by more than 30 per cent over the past year. And after promise of a revival, the
value of investment housing has well and truly turned negative again.
“Current developments are acting to put a lid on residential building activity which will only add
to the chronic shortage of housing and put further pressure on rents.”
He said “Residential building looks likely to remain in the doldrums until well into the second half
of next year.
“With housing now suffering serious collateral damage in the fight against inflation, the Reserve
Bank needs to rule out further interest rate rises and the case appears to be building for a rate
cut later this year.”
The total number of dwellings financed for owner occupiers, seasonally adjusted, fell by
7.9 per cent in May 2008, to be down 21.5 per cent on the same month last year.
The number of loans for ‘new’ dwellings (construction and new combined) fell by 7.5 per
cent in May to be down 20.9 per cent on the same month last year.
-
the number of loans for the construction of dwellings fell by 5.0 per cent in May, to
be 4.7 per cent down on the same month last year.
-
the number of loans for the purchase of new dwellings fell by 13.5 per cent in May, to
be down 45.3 per cent on the same time last year.
The number of loans for the purchase of established dwellings
fell by 8.0
per cent in
May, to be down 21.6 per cent on the same time last year.
The value of lending to finance the purchase of investment housing fell by 6.8 per cent in
May, to be down 19.2 per cent on a year ago.
For further information contact:
Peter Jones, Chief Economist, Tel: 02 6202 8888, Mbl 0403 440 838
NEWS 
