Lending to first-home buyers has tumbled after the Federal Government phased out generous hand-outs that had sparked a buying spree at the lower end of the property market.
Official figures yesterday showed the number of new home loans issued in November dropped by 5.6 per cent, after the First Home Owners Boost was cut from $7000 to $3500 for existing houses at the end of October.
First-home buyers' share of new loans fell to 22 per cent, from 26 per cent in October. More falls are likely in months ahead, as the remaining $3500 boost was removed at the end of December.
Some slump in lending was expected following a surge in activity prompted by generous Government support and low interest rates.
But yesterday's fall was sharper than the 0.5 percentage point drop predicted by economists, and was followed by a US0.9c fall in the Australian dollar.
Despite the slowdown, the rush to exploit interest rates at record lows has ensured that activity in the housing market remains much stronger than a year ago.
The Bureau of Statistics figures also showed the total value of housing loans, $22.8 billion, was 25 per cent higher than November 2008.
"As anyone in the housing industry will attest, the Government's housing stimulus measures have been an undeniable success in boosting activity in the sector to very high levels, so obviously the withdrawal of those measures will have some impact," the Treasurer, Wayne Swan, said.
"Even so, it's encouraging that loans for new home constructions are the strongest since 1994 and loans to first-home buyers are still running very strongly at 2001 levels."
Thanks to this strength in the housing market, Commsec said, the average home loan had jumped 9.9 per cent in the year, to $279,900.
With interest rates expected to rise further this year, the shadow treasurer, Joe Hockey, blamed the fall in new loans on higher interest rates caused by government spending.
"[The figures are] further evidence of the fact that Australians are finding it more difficult to get credit and, moreover, that credit is increasingly expensive and will continue to be expensive whilst the Government spends so much money," Mr Hockey said.
"If the Government continues to spend at reckless levels the impact on Australian families in 2010 will be devastating in the form of higher interest rates."
Source From SMH
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