Australia’s speculator frenzy continues to fizzle-out, according to yesterday’s Lending Finance data for May, released by the ABS.
In particular, the share of loans going to New South Wales investors registered their 11th consecutive monthly decline; with the annual value of investor mortgages also continuing to fall.
As shown below, the annual value of investor loans in New South Wales (read Sydney) fell for the eighth consecutive month, with Victoria (read Melbourne) – the second hottest market – also retracing, albeit more slowly. Similarly, investor loans in Western Australia and Queensland are also in retreat:
As shown below, rolling annual growth in investor loans has fallen sharply across the board, with Western Australia deeply in the red:
Nevertheless, as at May 2016, investors accounted for a still-staggering 53.4% of total housing finance commitments (excluding refinancings) in New South Wales (Sydney), although this was down sharply from the record 60.3% share posted in June 2015. Victoria’s (read Melbourne’s) share of investor mortgages also fell to 44.9% in May, down from July’s 50.5% peak. The share of investor lending was never as dominant in the other major jurisdictions; but they too are in retreat:
Putting the two charts together for New South Wales (Sydney) produces the following:
Whereas the turnaround in Victoria (Melbourne) is less pronounced:
However, despite the sharp drop in annual growth, there has been a rebound in investor demand in New South Wales since bottoming-out in November:
APRA should immediately drop its 10% ‘speed limit’ on investor lending – which was always far too high (given weak wages and nominal GDP growth) – to 5%, in a bid to stamp-out any investor uprising.
