New home financing numbers good for construction

Housing finance figures from the Australian Bureau of Statistics (ABS) have been greeted with open arms by the housing industry. 

New home lending grew during the final quarter of the 2013/14 financial year, according to the ABS, with an increase of 12 per cent over the full time period. 

"The residential construction industry has responded strongly to these signals," commented Housing Industry Association (HIA) Economist Diwa Hopkins in an August 8 release. 

""In terms of new home lending being a leading indicator of residential building, today's housing finance figures suggest home building activity should continue its strong recovery as we progress through the second half of the year."

This suggests that demand for trash pumps and other equipment involved in construction may be strong in coming months, as tradies and chippies get to work on building more residential houses. 

The number of loans for construction grew by 1.1 per cent over June of this year, and 0.7 per cent over the June quarter, suggesting steady and sure growth in the sector. 

Master Builders of Australia (MBA) were equally positive about the figures. 

"The solid 2.2 per cent seasonally adjusted rise in finance commitments for new housing will inspire continuing confidence in the residential building sector," said MBA Chief Economist Peter Jones in an August 8 statement. 

Mr Jones further noted that it meant commitments to new housing had increased for the second month in a row, which was a positive sign for the construction industry.

The news follows the Reserve Bank of Australia's announcement at the start of the month that it was keeping the cash rate low at 2.5 per cent. The resulting low interest rate environment has no doubt increased buyer confidence in the housing market, fuelling demand for new housing.