Investor borrowing moderating, even before latest tightening measures
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May 16, 2017
Investor borrowing moderating, even before latest tightening measures
Housing lending to property investors softened in March, says Malcolm Gunning, president of the REIA, even before regulators and banks tightened lending to investors and before budget initiatives aimed at property investment were announced.
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Image by Engin_Akyurt via Pixabay
The latest housing finance figures from the Australian Bureau of Statistics show that finance approvals for investor housing are moderating.
“The value of investment housing commitments decreased by 0.3 per cent in March 2017 in trend terms," said Malcolm Gunning, president of the REIA. Owner-occupier housing commitments rose 0.1 per cent.
Gunning said the softer March data is for the period before regulators and banks limited lending in May, and also before the announcement of budget measures limiting deductions on investment property.
“Overall the figures for March 2017 show, in trend terms that the number of owner-occupied finance commitments decreased by 0.1 per cent," said Gunning.
Finance commitments increased in New South Wales, South Australia, Tasmania, Australian Capital Territory and the Northern Territory (the Northern Territory had the largest increase with a rise of 1.8 per cent).
Decreases were recorded in Queensland and Western Australia.
Finance commitments were flat in Victoria in March.
The data showed a first improvement in the rates of borrowing for first-home buyers. The proportion of first homebuyers of total owner-occupied housing finance commitments increased to 13.6 per cent in March 2017, said Gunning. The February result was only 13.3 per cent.
The number of first home buyer commitments increased by 20.5 per cent and is at its highest since November 2016, said Gunning.
Gunning warned that the latest data shows demand from property investors is softening, and recent measures to dampen investor borrowing further could weaken the construction sector, which in turn could hit broader economic growth.
“The March figures show that the market is adjusting," said Gunning.
"We will need to closely monitor the cumulative impact of recent actions by the regulators, banks and the Federal Budget initiatives to ease demand by property investors and ensure that they don’t threaten economic growth through reduced construction activity," he concluded.
Read more from Malcolm Gunning, president of the REIA:
Commercial property market to strengthen further in 2017: Gunning
REIA calls for action on affordable housing and property taxation
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