Australian Bureau of Statistics (ABS) figures show a dramatic drop in new housing loans.
The new ABS Lending to Households and Business figures show the total value of new lending to households dropped 19.8 per cent from December 2017 to December 2018.
Owner-occupiers took the biggest hit, with finance commitments decreasing 0.1 per cent, marking the fifteenth consecutive month of decreases.
If you exclude refinancing, the number of owner-occupied finance commitments decreased by 1.2 per cent –also the fifteenth consecutive month of decreases, the lowest since April 2013, says Real Estate Institute of Australia (REIA) President Adrian Kelly.
Queensland had the largest decrease of 1.3 per cent.
Investment housing commitments were also down, dropping by 2.5 per cent in December, marking the lowest it's been since 2012 and less than half of the April 2015 peak, according to Mr Kelly.
Pictured: Adrian Kelly. Image supplied by REIA.
Established dwelling purchase commitments also fell by 1.2 per cent while the purchase of new dwellings dropped 0.1 per cent, and new home construction also fell 1.2 per cent.
The number of first-home buyers also fell away, dropping to 17.7 per cent. The number of loans to first-home buyers declined by 18.8 per cent.
Mr Kelly says the fall in housing finance is a reflection of the slowing property market and APRA restrictions on investors, which went for "far too long".
The fallout from the Royal Commission into banking and changes to property taxation and its impact if there is a change in government are also weighing heavily on falling housing finance figures.
“There is a very clear risk that the decline in activity in the residential property market will become a major drag on the economy," Mr Kelly told WILLIAMS MEDIA.
"With the Government formulating its 2019 Budget and its response to the Hayne Royal Commission the contribution the property sector makes to the economy should be at the forefront of its considerations."
Pictured: Tim Lawless. Image supplied by CoreLogic.
CoreLogic Head of Research Tim Lawless says the Reserve Bank of Australia (RBA) is potentially becoming less comfortable with the performance of the nation's housing market.
"Add to this a consistent downtrend in dwelling approvals, weakening consumer sentiment and softer retail trade figures, and it looks like the household sector could start to weigh down economic growth," Mr Lawless said.
Building industry feeling the impact, says housing body
The Housing Industry Association's Principal Economist Tim Reardon told WILLIAMS MEDIA lending for the purchase of a new home has continued to slow, causing the building market to cool.
“This downturn is long been forecast but there are ongoing risks regarding its length and depth," Mr Reardon said.
Pictured: Tim Reardon. Image supplied by HIA.
“This decline in investor activity will turn around quickly when home prices stabilise.
Master Builders Australia CEO Denita Wawn has called on the government to support growth in the $222 billion building and construction in the Federal Budget.
Related reading: Queensland's building sector faces "challenging" year ahead
Ms Wawn said the Budget should back the nation’s builders so that they can continue to play their role as drivers of growth.
“A strong building industry means a strong economy. Our industry has done the heavy lifting over recent years to support the economy’s transition from the mining construction boom and is now underpinning much of the economic growth supporting the return to the surplus that’s forecast for 2019/20. What we need now are Budget measures to help our industry sustain that growth,” Ms Wawn said.
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