The Housing Industry Association’s (HIA) New Home Sales Report showed that detached house sales increased by 3.6% in November—rebounding from previous weak figures and ending the year on a more positive note.

However, this rise in sales is unlikely to put an end to the downward trend seen throughout the year, given the cooling housing markets of Sydney and Melbourne, HIA economist Geordan Murray said. The tight credit environment has also been contributing to the recorded declines.

Despite the monthly rise, the overall level of sales in November is well below the level from a year ago. It is also lower than the typical number logged for most of the period since 2014.

Murray said that the tighter lending environment was caused by banks adapting to the more restrictive lending regulations from The Australian Prudential Regulation Authority (APRA) and increased scrutiny from the Hayne Royal Commission.

According to HIA, the credit squeeze first started to hurt the investor side of the market in 2017. More recently, the owner-occupier market has similarly been weighed down by the impact of the crunch.

“Tighter credit conditions facing owner-occupier borrowers are now weighing on the detached house building market, illustrated clearly by the reduced levels of new home sales and building approvals,” Murray said.

He warned about the possibility of the credit crunch still lingering next year. “With the Royal Commission scheduled to release recommendations early next year we see a risk that the credit squeeze may drag on into 2019. With the new home market already looking vulnerable, policy makers will need to proceed cautiously when responding to the commission’s recommendations,” Murray said.

The monthly increase was geographically widespread—improved sales were recorded in Victoria (7.3%); Queensland (2.1%); South Australia (7.4%); and Western Australia (2.2%). New South Wales was the only state to buck the trend, declining by 3.3%.