The value of investment housing commitments, excluding refinancing, has reached its lowest level in eight years, according to data from the Australian Bureau of Statistics.

The March 2019 Lending to Households and Business figures released on Monday showed the values of investment housing commitments had decreased 2.7 per cent in March, representing a 25.9 per cent decline from the same time last year.

It has been matched with an overall decline in the number of loans for housing, excluding refinancing,  according to the Real Estate Institute of Australia (REIA).

March 2019 Lending to Households and Business figures - At a glance:

• The value of lending commitments to households fell 3.7 per cent in seasonally adjusted terms. This follows a 2.2 per cent rise in February 2019.
• Lending to households fell across all components in seasonally adjusted terms, with the largest falls in personal finance (down 11.2 per cent) and owner occupier dwellings (down 3.4 per cent).
• In trend terms, lending commitments for owner occupier dwellings fell 0.9 per cent and investment dwellings fell 2.1 per cent in March 2019.

REIA President Adrian Kelly said figures show, in trend terms that the number of owner-occupied finance commitments, excluding refinancing, decreased by 1.6 per cent – the eighteenth consecutive month of decreases and the lowest since December 2012.

“In trend terms, decreases were recorded in all states and territories with the largest decrease of 3.3 per cent in the Northern Territory," he said.

“The value of investment housing commitments, excluding refinancing, decreased by 2.7 per cent in March.

"This is down 25.9 per cent from a year ago and is at its lowest level since March 2011.

“The number of loans to first home buyers increased by 8.2 per cent and the proportion of first home buyers, as part of the total owner-occupied housing finance commitments increased in March to 18.0 per cent from 17.7 per cent in February."

Mr Kelly added while there were "a number of reasons" for the continued decline, the timing of the election would have contributed to the trend.

“One of the reasons would have been the expectation of the calling of the election after the budget, and the uncertainty this generates regarding outcomes including concern about changes to property taxation and its impact should there be a change in Government,” he said.

Intervention needed

HIA economist Tim Reardon said Governments should be reversing the punitive measures and replacing them with more prudent measures, such as assisting first home buyers to save a deposit.

“Market confidence fell away in the later part of 2018 as dwelling prices corrected, adversely impacting all segments of the market. Investors and owner occupiers are delaying purchase decisions and foreign investment has also fallen dramatically for numerous reasons," he said.

“This has resulted in the sharpest correction to building approvals since the introduction of the GST. The pipeline of building work has shrunk over the past six months as the volume of work entering the pipeline fell away. 

“Governments have introduced a range of measures over the past three years which have all impacted activity in the housing market. 

“These measures have seen domestic and foreign investors exit the market."

Click here to view the March 2019 Lending to Households and Business figures

By Sean Slatter

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