Home lending activity declined sharply over April with buyer activity sidelined as a result of holiday distractions, the looming federal election and the increased likelihood of higher interest rates impacting confidence.
Declining affordability as a result of recent strong home price growth has also acted to reduce buyer capacity and decrease activity levels.
The ABS reports that the value of home loans seasonally adjusted (excluding land and alterations and additions) decreased sharply by 6.5% over April compared to the previous month to be 4.7% lower than reported over April 2021.
Home lending over the first four months of 2022 however remains 4.6% higher than recorded over the same period last year.
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The monthly decline in activity was the sharpest recorded since May 2020 - reflecting the onset of severe Covid restrictions.
All states reported decreases in home lending over April with NSW recording the sharpest decline - down by 10.6%.
Falling affordability through recent booming house prices will now be significantly influenced by rising interest rates over the coming months which will place more downward pressure on home lending.