New figures from the Australian Bureau of Statistics (ABS) showed the persistent decline in home lending as lending restrictions continue to take a toll on the market.
According to ABS, housing finance commitments for construction and purchase of new homes declined by 3.4% in December. If compared to the same period in 2017, finance commitments were down by 13.4%.
Housing Industry Association principal economist Tim Reardon said the slowdown has already exacerbated due to the tighter lending conditions imposed by lenders last year. This added to the restrictions imposed by the Australian Prudential Regulation Authority on investors several years ago.
In fact, lending to investors has already slumped by 47.8% from its peak in April 2015.
"The banks have tightened lending requirements throughout 2018 and this is impacting on investors and owner-occupiers. This downturn is long been forecast but there are ongoing risks regarding its length and depth," Reardon said.
In regional terms, Queensland saw the largest decline in lending to owner-occupiers at 22.8%. It was followed by Northern Territory (14%), Victoria (12.6%), Western Australia (8.4%), New South Wales (6.7%), and South Australia (4.4%).
Only Tasmania and ACT posted growth in lending in the quarter, up 4.2% and 4.4%, respectively.
"The longer-term outlook for the market remains solid while ever the unemployment rate and population growth remain at current levels," Reardon said.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now