Housing credit growth slows

Advertisement
ScreenHunter_12 Sep. 23 12.54

By Leith van Onselen

The Reserve Bank of Australia (RBA) today released the private sector credit aggregates data for the month of March:

ScreenHunter_2215 Apr. 30 12.18

A chart showing the long-run breakdown in the components is provided below:

Advertisement
ScreenHunter_2216 Apr. 30 12.20

Personal credit growth (-0.1% MoM; -0.3% QoQ; 0.4% YoY) and business credit growth (0.2% MoM; 0.9% QoQ; 2.6% YoY) continue to grow at a modest pace in annual terms, whereas housing credit growth (0.5% MoM; 1.6% QoQ; 5.9% YoY) is stronger, although is remains at fairly subdued levels relative to its long-run average growth rate.

The below chart shows that housing credit growth is clearly slowing after accelerating in the middle of last year:

Advertisement
ScreenHunter_2217 Apr. 30 12.23

A long-run breakdown of owner-occupied credit (0.4% MoM; 1.3% QoQ; 4.9% YoY) and investor credit (0.7% MoM; 2.1% QoQ; 7.9% YoY) is provided below:

ScreenHunter_2218 Apr. 30 12.24
Advertisement

Clearly, much of the current mortgage demand continues to be driven by investors, which has also been reflected in recent housing finance data from the Australian Bureau of Statistics:

ScreenHunter_2219 Apr. 30 12.26

That said, both components are now slowing, with the quarterly growth rate falling:

Advertisement
ScreenHunter_2220 Apr. 30 12.27

Finally, the share of loans going to housing hit a record high 60.34% in March 2014, whereas loans to businesses hit an all-time low 33.36%:

ScreenHunter_2221 Apr. 30 12.30
Advertisement

No wonder housing is killing Australia’s productive economy.

[email protected]

www.twitter.com/leithvo

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.