The home loan uptake for new home constructions or a newly completed dwellings may have risen by 5.7 per cent in May, up from 3.3 per cent rise in April, however further sustained improvements are needed to see this trend continue, according to the Housing Industry Association (HIA).
HIA senior economist Andrew Harvey said new home lending for the first five months of 2011 was down by 15.7 per cent on the same five months in 2010.
He said the new finance slide has coincided with the November interest rate hike last year, which "buffeted the confidence of potential homebuyers".
"When we consider how important new home lending is as a leading indicator of residential building activity the overall profile does not bode well for home building levels in Australia," said Harvey.
"If the pre-GFC (global financial crisis) trend in new home lending had continued then we would be seeing lending in the order of 10,000 loans per month rather than the 6000 or so loans we currently have."
HIA reports that loans for the purchase of new dwellings increased by 4.6 per cent in the month of May 2011, however it didn’t compensate for the five per cent drop in the May 'quarter'.
Across the nation for the month of May, in seasonally adjusted terms, Western Australia led in new home loan growth with a 10 per cent increase. New South Wales was next in line with a six per cent increase, followed by South Australia with a 5.4 per cent increase, Victoria with a 5.3 per cent increase, and Queensland with a 3.9 per cent increase.
Tasmania, the Northern Territory and the Australian Capital Territory all experienced a decrease in new home loan uptake for the month of May with a 2.7 per cent, 6.1 per cent and 7.5 per cent declines respectively. However, for the May quarter the story changes with the only new loan uptake increases experienced in Tasmania and Northern Territory with a 5.4 per cent and 0.6 per cent increase respectively.