Total dwelling finance drops by 4.4% in March

First home buyers are currently "the only bright spot" in the market

Total dwelling finance drops by 4.4% in March

The country saw a 4.4% drop in total dwelling finance last March from a month prior, according to figures released Friday by the Australian Bureau of Statistics.

REAI president Malcolm Gunning said that the number of owner-occupied finance commitments, in trend terms, fell by 0.7%, marking its sixth straight month of decline. If refinancing is excluded, the commitments would fall by 0.9%, still the sixth consecutive month of decreases.

“In trend terms, decreases were recorded in all states and territories except Tasmania, where lending increased by 7.2%. The largest decrease of 1.3% was in the Northern Territory,” Gunning said in a statement.

He added that the value of investment housing commitments dropped by 0.9% in March in trend terms, revealing that purchases of dwellings for rent or resale hit its lowest point since May 2016.

“In trend terms, the number of established dwellings purchase commitments decreased by 0.7%, while the purchase of new dwellings decreased by 0.8% and new dwelling construction fell by 1.2%.”

The proportion of first home buyers in the total owner-occupied housing finance commitments may have decreased marginally to 17.4% in March compared to 17.9% last month, but the number of loans to first home buyers jumped by 5.8% compared to February.   

Gunning thinks APRA may have “constrained bank lending too long and created a credit squeeze”, and didn’t consider the lag effect their decision could cause in the marketplace. “The only bright spot in the market is first home buyers,” Gunning added.