The number of loans for new dwellings has dropped for the second consecutive month as the effect of three rate rises last year begins to make its mark on borrowers.
According to the Australian Bureau of Statistics, the number of loans for new dwellings dropped by 6.4 per cent in December, following a 7.1 per cent drop in November.
The Real Estate Institute of Australia (REIA) president David Airey said the data suggests the Reserve Bank’s decision to keep interest rates on hold in February was justified.
“The evidence is showing that caution is still needed in monetary policy,” he said.
The proportion of first home buyer loans now sits at 21 per cent, the lowest since October 2008 and well down on the peak of 28.5 per cent seen in May 2009.
Housing Industry Association chief economist Dr Harley Dale said government incentives for new home buyers would help ramp up lending once more.
“Targeting incentives on new dwellings makes a lot more sense than pumping money into the churning of established dwellings,” he said.
“The tilting of first home grants to new dwellings has lifted both the demand for new homes and the level of new home construction.”