An uptick in new home approvals has done little to counter a downward trend in new construction work triggered by higher interest rates and the expiry of COVID-19-era government home-building programs.
New home approvals have picked up four per cent, new Australian Bureau of Statistics data shows, following a sharp 27.1 per cent drop off in January.
ABS head of construction statistics Daniel Rossi said private sector houses were the chief driver of the better February results, lifting 11.3 per cent for the month, but were still 13.6 per cent lower than 12 months prior.
Sign-off on private sector dwellings excluding houses, which includes apartments and townhouses, sunk another 9.5 per cent in February after plummeting 40.3 per cent in January.
Mr Rossi said this series was at its lowest level since July 2012.
The slowdown in borrowing for housing also continues its decline from record highs in January 2022, falling another 0.9 per cent in February.
Now sitting at $22.6 billion, the total value of new housing loan commitments has dropped by 33 per cent.
BIS Oxford Economics senior economist Maree Kilroy said lending data patterns were following trends in property prices, which have stabilised in the past few months.
While the slowdown in lending continued, Ms Kilroy said the pace of monthly decline had eased considerably for both owner-occupiers and investors.
Home values have picked up sharply in NSW, where lending was also tracking upwards, she said.
Despite the apparent stabilisation in property prices and lending, Ms Kilroy expected rapid interest rate rises would start to bite and push more households into mortgage stress, forcing some to sell up.
She said this would likely prolong the decline in home prices through to the end of the year.
But in February, CoreLogic’s measure of property prices lifted for the first time in 10 straight months, rising a notable 0.6 per cent.
Commenting on the first monthly improvement in national home prices in almost a year, CoreLogic research director Tim Lawless said the tight rental market, the return of overseas migrants and a shortage of new homes listed on the market were all playing a role.
He said these factors have been enough to counter the downward pressure of higher interest rates.
Prices increased by 1.4 per cent in Sydney, by 0.6 per cent in Melbourne, 0.1 per cent in Brisbane and 0.5 per cent in Perth.
All other capital cities recorded declines, with prices in Hobart falling the most across the month, by 0.9 per cent.
Regional housing markets also recorded a 0.2 per cent increase.
© AAP 2023
