Lending to fund home renovations plunged to a 17-year low of $310.8 million in May as attitudes toward the strength of Australia’s property markets continue to darken.
The latest Bureau of Statistics data represents a 22.6 per cent slump from the most recent peak of $401.3 million in September last year, in trend terms.
The result formed part of Friday’s ABS lending finance figures, which showed an overall fall of 1.4 per cent to $67.4 billion.
A recent decline in property prices, led by Sydney, tighter lending restrictions and stagnant wages growth have Australians shying away from committing to expensive home improvements, according to senior CommSec economist Ryan Felsman.
“Aussies had found it incredibly difficult to find a local tradie in recent years as the housing market was going gangbusters,” Mr Felsman said, adding that attitudes have now changed and purse strings are being tightened.
“Homeowners appear to be less enthused about taking out a loan to renovate their abodes.”
“… More people are shelving immediate plans to add extra rooms or revamp kitchens and bathrooms as the housing market slows in some cities and regions.”
The data comes after NAB this week reported sentiment toward the housing market dropped to a two-year low in the most recent quarter.
The weakness of bank’s residential property survey contributed to the bank cutting its national property price forecast, with NAB economists now expecting capital city house prices to give up 1.8 per cent this year and edge another 0.1 per cent lower in 2019.
Unit prices are now expected to fall 1.7 per cent in 2018 and 2.2 per cent in 2019.
“Weaker sentiment was evident in all states,” NAB chief economist Alan Oster said.
“Overall confidence levels fell to a new survey low, driven down mainly by NSW and Victoria where capital city house prices declined,” he said.