Yesterday’s housing finance data for December, released by the Australian Bureau of Statistics (ABS), contained a morsel of good news in that the number of finance commitments for new dwellings and construction increased by a seasonally-adjusted 1.5% over the month and was 8.1% higher over the year, to be tracking in line with the 5-year moving average (5YMA):
However, while the pick-up over the year is encouraging, finance commitments for new dwellings and construction were -1.9% below the level of September 2012, which was the month prior to the changes to first home buyer (FHB) incentives in New South Wales and Queensland aimed at boosting new home construction.
It’s too early to declare the FHB changes a failure, however, with New South Wales registering a solid pick-up in finance commitments for new dwellings and construction since the changes were implemented, whereas Queensland has experienced only very modest growth (see next chart).
It seems the main cause of the tepid recovery in new home finance is Victoria, where finance commitments have taken a big hit following the removal of the $13,000 First Home Bonus on newly constructed dwellings on 1 July 2012. There, the number of new dwelling and construction finance commitments have slumped by nearly -20% since the middle of last year, offsetting strong gains in Western Australia.
Overall, the data seems to confirm with the luke warm recovery taking place with respect to dwelling approvals and new home sales, which have shown only modest improvement from highly depressed levels.