10 December 2018

Master Builders Australia’s Chief Economist Shane Garrett said the latest housing finance data showed that, “The three months to October were the worst for housing loans to investors in over 5 years.”

The ABS results for housing finance during October 2018 have just been released. They show that the value of investor loans fell by 4.3% during the three months to October and were 18.5% lower compared with the same time last year.

“August 2013 was the last time investor lending volumes were as low as they are now. Lending to housing investors has fallen by over 30% since the peak in early 2015,” Shane Garrett said.

“The introduction of more stringent APRA regulations in early 2015 kicked off the decline in investor lending. It has been greatly exacerbated by the commencement of the Royal Commission’s work – lenders have become much more nervous about making financing available,” he said.

“The reduction in investor activity is not all down to lending policies. Many investors are reluctant about entering into markets where house prices are falling. In other places, rental price growth is soft and investors have sat out,” Shane Garrett said.

“While investors are exiting the market at the moment, the story for First Home Buyers is much more positive. At 18.1%, the FHB share of owner occupier housing loans is at its highest since late 2012. About 114,000 FHB home loans have been issued over the past 12 months - an increase of 14.9% on a year earlier,” he said.

“Despite the significant challenges the housing market faces, it is encouraging that so many Australians can look forward to celebrating Christmas in their very own home for the first time this year,” Shane Garrett said.

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Hear from Master Builders' Chief Economist Shane Garret: