Yesterday’s Housing finance figures from the Australian Bureau of Statistics (ABS) revealed a blow-off in investor demand, with investor finance commitments jumping by 8% in October, 29% over the year, and hitting the highest level on record (see next chart).
When looking at the state-by-state breakdown of investor mortgage demand, which is published in a separate release by the ABS and available to September 2013 only, you can see that New South Wales (read Sydney) is by far the biggest contributor to Australia’s investor blow-off (see next chart).
In fact, as at September 2013, investors accounted for a whopping 51% of total housing finance commitments (excluding refinancings) in New South Wales, which is just below the all time high of 52% reached in the “bubble” days of 2004 and well above the experience of the other major capitals (see next chart).
With investors so active, it is not surprising then that first home buyer (FHB) demand in New South Wales has collapsed, with FHBs accounting for just 10% of total finance commitments in the year to September 2013 – an all time low. FHB demand has also collapsed in Queensland, although investors are less active there (see next chart) and Victoria is heading the same way.
The situation in Sydney is perhaps best summed-up by the next chart, which plots investor mortgage commitments in New South Wales against FHBs:
Never before has this divergence been so large.
