Prop­erty buy­ers flood back to mar­ket

AU­GUST JUMP IN IN­VESTOR LEND­ING

The Australian - - THE NATION - DAVID UREN ECO­NOM­ICS ED­I­TOR

Lenders ap­proved a record $33.9 bil­lion in new hous­ing loans in Au­gust, with first-home buy­ers flood­ing back to the mar­ket, helped by NSW and Vic­to­rian gov­ern­ment in­cen­tives.

In­vestor lend­ing rose 4.8 per cent in the past two months, and is start­ing to re­verse the pre­vi­ous five months of steep falls, which fol­lowed a cool­ing in the Syd­ney mar­ket and new lend­ing re­stric­tions im­posed by the Aus­tralian Pru­den­tial Reg­u­la­tion Au­thor­ity and the Re­serve Bank.

Re­search di­rec­tor for prop­erty data group CoreLogic, Cameron Kusher, said it was too soon to say whether the in­vest­ment mar­ket was de­vel­op­ing a new mo­men­tum. How­ever, he said, prop­erty re­mained at­trac­tive.

“In­vestor credit growth has picked up in each of the last two months sup­ported by low in­ter­est rates, while de­mand is also be­ing driven by new in­cen­tives for firsthome buy­ers,” he said.

Although banks raised rates for the in­ter­est-only loans favoured by in­vestors fol­low­ing con­cerns of reg­u­la­tors, Mr Kusher noted that some banks had low­ered mort­gage rates for prop­erty in­vestors in re­cent weeks.

He said there were many signs of the Syd­ney hous­ing mar­ket cool­ing, with more stock com­ing on to the mar­ket and val­ues de­clin­ing. But the same was not true of Mel­bourne, Ho­bart, nor many re­gional mar­kets. Corelogic recorded a 0.29 per cent fall in Syd­ney house val­ues in Septem­ber.

Pop­u­la­tion growth, with Syd­ney and Mel­bourne in­creas­ing by about 100,000 peo­ple a year, en­sured there would be con­tin­u­ing pres­sure on hous­ing mar­kets in both cities, Mr Kusher said.

To­tal in­vestor lend­ing in Au­gust was just 6.5 per cent higher than a year ago, con­trast­ing with the 26 per cent growth rate at the start of the year, which sparked reg­u­la­tor con­cern.

Re­serve Bank gov­er­nor Philip Lowe said in Au­gust that he be­lieved the reg­u­la­tors had “done enough” to lower risks in the hous­ing mar­ket.

It would be pos­si­ble for fur­ther “macro-pru­den­tial” or reg­u­la­tory mea­sures to be im­posed if in­vestor de­mand con­tin­ued to build, but Com­mon­wealth Bank se­nior econ­o­mist Michael Work­man said he be­lieved the lat­est reg­u­la­tory mea­sures, which took ef­fect in April, would be ef­fec­tive.

“We ex­pect a grad­ual eas­ing in lend­ing growth rates un­der the weight of new APRA guide­lines and higher mort­gage rates for in­vestors and those with in­tere­stonly loans,” he said.

The ABS hous­ing fi­nance re­port shows first-home buy­ers ac­counted for 17.2 per cent of new dwellings fi­nanced in Au­gust, the high­est share since 2013, un­der the ef­fect of new stamp duty ex­emp­tions in NSW and Vic­to­ria.

Mr Work­man noted that this was still be­low the 20 per cent av­er­age share for the past two decades, but it was a long way ahead of the low point of less than 13 per cent reached last year.

ANZ se­nior econ­o­mist Daniel Grad­well said fi­nance for the con­struc­tion or pur­chase of new dwellings was ris­ing, with par­tic­u­larly good growth in NSW, Vic­to­ria and Queens­land. But the Hous­ing In­dus­try As­so­ci­a­tion said an Aus­tralian Bureau of Statis­tics re­port on build­ing ac­tiv­ity re­leased on Wed­nes­day showed the num­ber of hous­ing starts was fall­ing, and said the lift in fi­nance ap­provals re­flected peo­ple now set­tling the pur­chase of prop­er­ties built over the pre­vi­ous year.

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