APRA’s investor clampdown slowing housing market

APRA’s investor clampdown slowing housing market

16 June 2017

Business Insider (Australia) reports there are early signs that APRA’s move to curb investor activity in Australia’s housing market is starting to bite.

According to the Australian Bureau of Statistics, the value of investor lending in April fell by 2.3% to $12.582 billion in seasonally adjusted terms, the weakest monthly total in seven months.

While total investor lending was still up 14.1% from a year earlier, the annual pace of growth now sits well below the 26.7% level reported in January this year.

“This is no surprise given the combination of out of cycle rate hike largely aimed at investors and the introduction of additional macroprudential regulation by APRA in late March,” said economists at ANZ.

“The data suggest those measures have had an immediate impact, an encouraging development for the RBA and the regulator.”

“We expect further slowing in the investor segment in coming months and broadly see the housing market as cooling from here,” said ANZ.

Henry St John, an economist at JP Morgan, noted that the slowdown in housing finance commitments was evenly distributed across Australia.

“The weakness in lending appeared well distributed across Australia, with owner-occupier lending volumes declining in all states except for Western Australia, which grew a modest 0.6% month-on-month,” he said.

On a positive note, loans to construct new dwellings bucked the trend, rising by 2.1% to 5,864, offering some hope that the expected decline in housing construction over the next few years will be slow and measured.

According to The Urban Developer, Geordan Murray, senior economist at Australia’s Housing Industry Association (HIA), agrees that residential mortgage lending is slowing.

“While housing finance figures released today show that overall lending slowed in April, the number of loans to households building new homes reached its highest level since 2015,” wrote Murray.

Recent weekend property sales figures from Domain Group also point to a slowdown, reports the Australian Financial Review. Sydney’s clearance rate fell to 67.1 per cent, the lowest reading since December 2015, the number of auctions rose to a relatively strong holiday total of 407.

“There’s no doubt the market has eased over the last month,” Domain chief economist Andrew Wilson said. “It’s not going to surge to 80 per cent again in Sydney short of some falls in interest rates, although the X-factor is the change in stamp duty that comes in from 1 July.”