The latest housing finance figures released yesterday by the Australian Bureau of Statistics (ABS) confirm that the influence of investors on the housing market is abating.

Despite an increase in the value of investment housing commitments in trend terms of 1.1% this follows nine months of falling investor lending in response to the increase in mortgage rates for investors and the strengthening of banks’ non-price lending terms.

In the current debate on negative gearing it is worth noting that the presence of investor activity has had a positive impact on the level of rents with the March quarter CPI figures released at the end of April providing evidence that the current taxation arrangements keep rents lower than they would otherwise be.

From 2013, when investment in housing started to pick up, we have seen the rate of increase in rents slow down in Australia. The March quarter 2016 increase was 0.1%, the lowest since March 1995. The annual increase in rents to March 2016 has been 0.9%, again the lowest since March 1995.

The housing finance figures for March 2016 show, in trend terms that the number of owner-occupied finance commitments dipped slightly by 0.2%. This follows eighteen months of increases. If refinancing is excluded, in trend terms for March, the number of owner-occupied finance commitments decreased by 0.4 per cent.

Decreases were recorded in all states except South Australia and the Australian Capital Territory with South Australia having the largest increase of 0.4 per cent. The largest decrease of 2.0 per cent was in the Northern Territory.

The proportion of first home buyers, as part of the total owner-occupied housing finance commitments, fell to 14.2 per cent and is the lowest since May 2004.

The lending figures show that the macro prudential measures introduced are working and that owner occupiers are the dominant force in the stabilising market. 

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Tide is turning for owner-occupiers