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New home loans fall for a thrid month

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New home finance commitments have fallen for a third consecutive month, a sign that the building sector is struggling to recover.

The number of home loans approved in December was down 1.5 per cent, according to Australian Bureau of Statistics data released on Monday.

The fall compares poorly with the flat result the market was expecting.

JP Morgan economist Ben Jarman said there is no evidence that the housing construction sector is turning around in a meaningful way, despite four interest rate cuts by the Reserve Bank of Australia in 2012.

"You're also seeing that from the RBA's credit data," he said.

"While the RBA has been talking about getting preliminary signs that the economy is getting a bit of traction in the expected spots as rates come down, it doesn't seem that anything really compelling is really happening.

"Borrowers who are really sensitive to rate adjustments haven't returned to the market in a meaningful way."

One bright spot in the housing finance figures was that loans approved to build new dwellings went up 1.9 per cent in December.

"That's what the RBA wants to see, they want to see people investing in new housing, rather than just turning over existing housing and running up house prices," Mr Jarman said.