There seems to be no sign of a turnaround in the housing market, with tougher lending standards continuing to put pressure on loans for owner-occupiers.

The November 2018 housing finance figures released by the Australian Bureau of Statistics show the number of home loan approvals fell by 0.9 per cent, which was better than market expectations of a 1.5 per cent fall.

The value of total housing finance was also down 2.5 per cent at $29.13 billion, with the value of new home loan for owner-occupiers down 1.4 per cent, and down 4.5 per cent for investor loans.

Real Estate Institute of Australia (REIA) President Adrian Kelly says the value of investment housing commitments decreased by 1.5 per cent in November, in trend terms, and is currently at 2013 levels.

“In trend terms, the number of established dwellings purchase commitments decreased by 0.1 per cent while the purchase of new dwellings decreased by 0.6 per cent and new dwelling construction fell by 0.9 per cent.

“The proportion of first home buyers, as part of the total owner-occupied housing finance commitments, increased in November to 18.3 per cent from 18.1 per cent in October and the number of loans to first home buyers increased by 3.5 per cent," Mr Kelly said.

He told WILLIAMS MEDIA the figures are reflective of the market conditions.

“The continued decline in housing finance reflects the slowing market, APRA restrictions on investors which went too far for too long, the fallout from the Royal Commission into Banking and concerns about changes to property taxation and its impact should there be a change in Government.

“With the Government formulating its 2019 Budget the property sector should be at the forefront of its considerations so that it doesn’t become a drag on the economy,” Mr Kelly added.

Housing Industry Association (HIA) Principal Economist Tim Reardon says the figures are one of the leading indicators of activity in the housing market, and reveal the level of building activity likely to take place in the second half of 2019.

“The fall in lending in November is consistent with the decline over the course of 2018 and tells us that the volume of work builders have in their pipeline is continuing to fall. 

“The fall is in a large part due to the credit squeeze imposed by the banks. 

“The credit squeeze started in 2017 when APRA imposed a range of restrictions on the market. It is now occurring at the behest of the banks, which have tightened lending above and beyond APRA’s requirements. 

"Our research has found the time taken to gain approval for a loan to build a new home has blown out from around two weeks to more than two months. 

“Policymakers and lenders alike need to be cognizant that ordinary home buyers are now facing excessive loan processing times and also much greater rates of loan rejection. Today’s results show how this is weighing substantially on the new home building sector. 

Mr Reardon told WILLIAMS MEDIA there's a risk the downturn could get even worse.

“We’ve long been anticipating the current downturn in new home building, but there is a risk it could develop more quickly and strongly than expected if additional restrictions are imposed on the market,” he said.

Related reading:

Calls for action as new home approvals continue falling

Property market 2019: Experts reveal what's in store

Housing finance numbers down while first home buyers up