By Leith van Onselen
The Reserve Bank of Australia (RBA) today released its private sector credit aggregates data for the month of May:
A chart showing the long-run breakdown in the components is provided below:
Personal credit growth (-0.3% MoM; -0.4% QoQ; 0.3% YoY) and business credit growth (0.2% MoM; 0.7% QoQ; 2.7% YoY) continue to grow at a modest pace in annual terms, whereas housing credit growth (0.5% MoM; 1.6% QoQ; 6.2% 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 appears to have leveled-out:
A long-run breakdown of owner-occupied credit (0.4% MoM; 1.3% QoQ; 5.2% YoY) and investor credit (0.8% MoM; 2.3% QoQ; 8.3% YoY) is provided below:
Clearly, the lion’s share of mortgage growth is coming from investors (see next chart), which has also been reflected in recent housing finance data from the Australian Bureau of Statistics.
Finally, the share of loans going to housing hit a record high 60.57% in May 2014, whereas loans to businesses hit an all-time low 33.19%:
Housing continues to strangle Australia’s productive economy.
