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Date PostedJanuary 19, 2015

New House Lending Increases Good News for Construction

Builders are pleased with the latest predictions that new house starts are going to continue rising over the next few years all across the country. According to a post on Sourceable.net.au, housing construction is likely to continue being boosted by lower interest rates and lending for new housing.

Economists are saying that the trend towards residential finance is still rising especially for new housing.

Builders are unsurprisingly pleased with these predictions of a bright future for the construction industry nationwide.

The article on Sourceable.net explains that the value of approved housing loans rose by one per cent between the months of September and October to $29.2 billion – that includes refinancing of existing home loans. This is a substantial increase from a year ago when it rose by $2.9 billion less.

Economists say this rise can be largely attributed to lower interest rates that were introduced by the Reserve Bank in an effort to boost economic activity. The post on Sourceable.net explains:

real-estate-valueAnd the motivation for the Reserve Bank to set that trend in motion was to lift economic activity, not to enrich property owners or to encourage speculation.

Part of that economic lift was always going to come from the enrichment of existing owners, who would then feel more inclined to go shopping – the so-called wealth effect.

But the main game is building.

And high prices encourage more building.

See more at: http://sourceable.net/increased-lending-good-news-for-residential-construction/#sthash.9Z5tWwSz.dpuf

This strategy seems to be working with the value of lending for new and planned housing, including investor loans earmarked for new housing, lifting to $3.64 billion in October. This is an increase of 13 per cent a month since last year, equating to $406 million. This growth is significant in that it indicates a rise of $1.36billion a month since 3 years ago when it was at its lowest point.

The Bureau of statistics says there is an upward trend of 22 per cent per annum and if we were to believe this predication that would mean an increase by a further $800 million next year at this time.

The post went on to explain the peculiar situation prevailing at the moment and what it could mean for the construction industry.

The current trend for building approvals is downward, at a rate of 12 per cent a year.

The combination of falling building approvals and rising finance approvals is unusual.

In the past, it has typically been resolved by a turnaround in building approvals – in other words, building has turned upward in a delayed response to a rise in finance.

If that happens again, then the housing industry might retain its status as the sector leading the economy’s stuttering transition away from mining-dominated growth.

That in turn would quell calls for more interest rate cuts.

See more at: http://sourceable.net/increased-lending-good-news-for-residential-construction/#sthash.9Z5tWwSz.dpuf

What this means for builders and workers in the construction industry is continued employment and a demand for skilled labourers in this sector may also result in salaries being driven up.

A skills shortage in the sector has also been anticipated, which is why we should be encouraging young people to consider entering the industry as apprentices to be trained on some or the other construction trade. We do need to keep in mind that in order to do this, these young people need to first be compliant with OHS regulations, mandating that each of them be in possession of a White Card.

Steven Asnicar is regarded as a leader across many fields of industry. In particular, his specialisation across the health, infrastructure, construction, resource and utility sectors has seen him successfully change the dynamics of these industries through the introduction of new strategic, marketing, training and technical frameworks. Steven works closely with industry peak bodies such as Safework Australia, Australian Logistics Council, National Advisory for Tertiary Education, Skills and Employment (NATESE) and the Council of Australian Governments in the development of new delivery standards and industry specific programs.

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