Australia's new home lending rose during quarter ended in March; home prices appear to be rising within more sustainable range following period of strong increases last year: Housing Industry Assn.

CAMPBELL, Australia , May 13, 2014 (press release) – Figures from the Australian Bureau of Statistics show that new home lending increased during the March quarter this year, alongside a further strengthening in dwelling prices, said the Housing Industry Association, the voice of Australia’s residential building industry.

“The value of lending to both owner occupiers and investors purchasing or constructing new homes increased during the March 2014 quarter,” said HIA Economist, Diwa Hopkins. “Owner occupier lending was up by 3.6 per cent, while investor lending increased by 4.9 per cent.”

“Today’s data also show that capital city residential property prices increased by 1.7 per cent during the first quarter of 2014, to be 10.9 per cent higher than a year ago,” added Diwa Hopkins.

“Following a period of fairly strong increases late last year, prices appear to be growing within a more sustainable range,” commented Ms Hopkins. “Combined with the current low interest rate environment, these developments provide favourable conditions for the residential construction sector.”

“Sustained strength in new home building will be of increasing importance on a number of fronts. In the first instance, Australia has seen quite strong population growth in recent years, yet the supply response has lagged and much catch-up is needed in order to meet that additional demand for housing,” explained Ms Hopkins.

“Also, as policy makers are acutely aware, the current winding down of mining investment and the likely substantial withdrawal of public demand we’ll see in tonight’s Budget both represent significant headwinds to the economy’s near term growth prospects. Residential construction is a key area of growth, which also has considerable links with rest of the economy. A sustained recovery in residential construction will be a crucial ingredient to a broader economic recovery,” concluded Ms Hopkins.

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