Federal election 2019: Builders blame tight lending laws for declining housing approvals in SA

Stricter bank managers are contributing to a decline in housing approvals, prompting calls from builders for the major parties to address the issue.

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Stricter bank managers are contributing to a decline in housing approvals, prompting calls from builders for the major parties to address the issue.

The Housing Industry Association (HIA) want the next Federal Government to adopt loan schemes that help new homeowners get into the market.

In South Australia, housing approvals have been on a downward trend since February 2014.

At that time, 821 houses were approved for the month to this February, when approvals dropped to 669 — a decline of 18.5 per cent.

The association’s SA executive director Stephen Knight told the Sunday Mail that potential homebuyers were finding it much harder to access finance as banks were conscious not to lend to anyone who could not afford to maintain loans following the banking royal commission.

HIA SA executive director Stephen Knight

His call also comes as the numbers of house builders in the state has reduced, with six going to the wall in about the past six months.

“The banks are much more stringent in their approach and in their criteria,” Mr Knight said. “If the banks were to ease their lending criteria at some point, it would have a (positive) impact on the market.

“What is also really hurting us is that it is taking a very long time to get the loans’ approvals. So builders may have a sale but are not able to start for a very long time.”

Mr Knight said another serious issue for homeowners was that valuations of new properties were often coming in lower than the cost to build the property.

“A customer may want to buy a house and land package, at a suburb like Munno Para, but when the valuations are done, the cost of the house and land build is exceeding what the current valuations are for properties nearby … which then leaves a larger deposit gap,” he said.

“So you then have to actually find the difference, which is difficult for first home buyers.” Mr Knight said the difference in the value was only really a problem if the house had to be sold straight away.

“The reality is most people buy a new home to live in for years to come — it will take care of itself in time,” he said.

The HIA wants the next federal government to make better use of the independent body set up to help promote home ownership — by helping first homebuyers access to appropriate housing finance.

Mr Knight said in Australia, 92 per cent of renters aspired to own their own home, yet half the population of existing renters thought they would never achieve home ownership.

Neither major party has said what they would do to address financing concerns, instead pointing to policies they claim would make home ownership easier.

A Liberal Party spokeswoman highlighted the first home super saver scheme, which allows first homebuyers to make voluntary contributions to their superannuation account to save money for a deposit.

“We also established the National Housing Finance and Investment Corporation to improve housing affordability in Australia,” the spokeswoman said.

A Labor spokesman said the party would build 250,000 new affordable rental homes over the next decade in partnership with the community housing sector for Australians on low and moderate incomes.

“A Shorten Government will reform negative gearing so that rental deductions can only be claimed on newly-built homes, which will increase new housing supply and support jobs,” he said.

“There will be no retrospective changes.”

Originally published as Federal election 2019: Builders blame tight lending laws for declining housing approvals in SA