Mortgage belts tighten as prices keep climbing
Home loans to build new properties have slumped to a year low, as high property prices and long council approval processes deter would-be builders.
House prices in NSW remain prohibitively high, prompting a 2.6 per cent fall in the number of residents taking out a loan in May.
NSW remains the only state where the average new mortgage is more than $250,000, Bureau of Statistics figures show.
The Labor leader, Kevin Rudd, yesterday promised to work with state and territory governments to speed up council approvals on development applications.
Mr Rudd said delays of up to 12 months could add up to 15 per cent to the cost of a house, due to “holding charges” imposed by lenders on developers for delays.
“If we can standardise and streamline the development approval process across Australia, we can take up to 15 per cent of the cost off housing across the country,” he said.
“Delays and disputes in the development application process are crippling the nation and hurting the small home owner,” he said.
But the Prime Minister, John Howard, insisted low interest rates remained the best solution to housing affordability.
“The truth is that the cost of servicing out of your disposable income the average housing loan is in fact lower now than it was in 1989,” he said.
With housing affordability continuing to dominate political debate, expectations are rising that home buyers will be offered some concessions before the coming election.
The latest housing figures show first-home buyers are struggling to get a foot in the door. Their representation among all new borrowers fell to 16.6 per cent in May, well below the historical norm of 21 per cent.
The average loan for a first home buyer hit a record of $238,500 in May.
The lack of new construction offers little hope for first home buyers hoping for prices to fall.
The chief economist at UBS, Scott Haslem, said: “The fact that by number, loans for construction are still weak overall suggests to us that upward pressure will remain on house prices and rents.”
For the full report, please visit www.smh.com.au
Source: The Sydney Morning Herald
