Investment housing loans are tanking, helping explain the way Sydney and Melbourne property prices have weakened in the past two months, and why auction clearances have plunged under 60% as more and more properties go unsold.
Housing finance data for October, released yesterday by the Bureau of Statistics, show clearly that the measures announced by key regulators APRA and the Reserve Bank to slow property lending are working.
RBA data has already seen a clear slide in investor lending to where loans rose at an annual rate of 9.7% in October (under the APRA nominated limit of 10% annual), down from the 11.1% growth rate in July.
The ABS data shows the value of investment loans has fallen 15% in three months and October’s $11.490 million was the lowest amount lent in 16 months, since the middle of last year
Overall, housing finance was flat in October at $33.2 billion, compared with September. That was better than the 2.1% slide in September and market forecasts for a small fall of 1%.
Owner-occupied housing commitments rose 1.9%, while commitments to investment houses dropped 3.1%.
But based on their value, loans approved for investment housing dropped 6.1% in October, while approvals for owner-occupied housing rose 0.4%.
That’s a clear sign the momentum in the housing market is back with owner-occupiers.
The total number of home loans approved in October fell by a better-than-expected 0.5%, while the value of total housing finance was down 2%, thanks to the slide in the value of investor loans.
On a trend basis, the ABS said the total value of investment housing commitment “fell ($387m, 3.1%) in October 2015 compared with September 2015”.
“Falls were recorded in commitments for the construction of dwellings for rent or resale ($29m, 3.5%) and commitments for the purchase of dwellings by individuals for rent or resale ($360m, 3.5%), while a rise was recorded in commitments for the purchase of dwellings by others for rent or resale ($3m, 0.2%),” the ABS said.
Finance approvals to build new houses fell by 0.4% in October from September. Approvals to buy newly built dwellings declined by 1.6%, while lending for the purchase of established homes dropped by 0.5%.
