Munching on APRA's wet lettuce regulation

Today I thought I’d have ago at what kind of impact APRA’s declared 10% growth limit for bank lending to property investors actually means for house prices.

To begin, the top ten banks in Australia have seen property investor growth of $44.7 billion in the year to January 2015. In descending order, Mac Bank miles ahead on 73%, NAB is growing at 13%, SUN at 12.5%, WBC at 10.4%, ANZ is 10.3%, CBA at 9.2%, HSBC at 6.2%, ING at 2.3% and BOQ is at 2.2%.

So, half of the biggest banks are over the line. By my calculations, if APRA were to pull these five banks behind 10% then growth in investor credit, all things equal, would fall roughly $3-4 billion over the next twelve months. We can draw a strong correlation between investor credit and house prices, sadly:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Munching on APRA’s wet lettuce regulation