Investor lending declines in most Australian markets

“Housing investor loans have retreated in most parts of Australia over the past year,” according to Shane Garrett, Chief Economist of Master Builders Australia.

“ABS figures which have just been released indicate that over the year to August 2018, the value of housing loans to investors was down in seven of the eight states and territories. This is partly a response to the heavier restrictions imposed by APRA as well as the fact that market conditions have moderated compared with two years ago,” he said.

“In cities like Sydney and Melbourne, investor engagement with the market is a crucial vehicle for delivering the housing needs of the strongly growing workforces locally – and in keeping these economies expanding,” Shane Garrett said.

“Home building activity is currently struggling in other parts of Australia like WA, SA and the NT. Restrictions on lending to investors is adding unnecessarily to the pain in these markets,” he said.

“Over the year to August, Tasmania was the only market to experience an increase in lending to housing investors,” Shane Garrett said.

“The increase in investor involvement in Tasmania’s housing market over the past year is welcome. Hobart is now the fastest growing city for rental prices and has the lowest rental vacancy rate in the country. The increase in investor activity means that more dwellings are coming onto the rental market – exactly what’s needed,” Shane Garrett said.

Over the year to August 2018, the value of investor lending in Tasmania rose by 8.2 per cent compared with 12 months earlier. The largest reduction in loans to investors affected the Northern Territory (-21.6 per cent), followed by Queensland (-18.9 per cent), New South Wales (-14.9 per cent) and Western Australia (-14.2 per cent). There were also reductions in investor lending in South Australia (-10.4 per cent), Victoria (-6.0 per cent) and the ACT (-5.8 per cent).