New home purchasers rise 5.3%

Written on the 21 April 2024

Australians purchased 5.3% more new homes in February than the month before, according to the Housing Industry Association (HIA).

However, HIA chief economist Tim Reardon said this increase was off a “very low” base. Based on the number of new homes being approved for construction and purchased, he forecast there would be a decade-low amount of homebuilding activity in 2024, despite the pent-up demand for housing.

Nevertheless, banks are still keen to lend to Australians who want to build a new home or renovate an existing one. To finance your project, you’ll need a construction loan (rather than a regular home loan). Here’s how construction loans work:

· To apply for a loan, you need to provide the lender with your building contract, building plans and council approvals

· You receive the money in stages (usually five) throughout the project, rather than one lump sum at the start

· You pay interest only on the portion of the loan you’ve received, not the entire amount

· Construction loans typically have terms of 12-24 months; they may then revert to a standard home loan

PropTrack's director of economic research, Cameron Kusher, forecast that the “tough rental market conditions” would continue.

“We expect supply to remain tight and demand to stay strong, likely pushing rents higher,” he said.

“Lending to investors trended higher over 2023, indicating that investors are returning to the housing market. However, many investors continued to sell, resulting in a relatively small pool of rental properties being available for the large number of people seeking accommodation. The rapid increase in Australia’s population exacerbated rental market challenges, as most people migrating to Australia become renters.”

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