Australia’s speculator frenzy continues to fizzle-out, according to today’s Lending Finance data for June, released by the ABS.
As shown below, the annual value of investor loans in New South Wales (read Sydney) fell for the 10th 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 most deeply in the red:
Nevertheless, as at June 2016, investors accounted for a still-staggering 52.4% of total housing finance commitments (excluding refinancings) in New South Wales (Sydney), although this was down sharply from the record 61.7% share posted in June 2015. Victoria’s (read Melbourne’s) share of investor mortgages also fell to 43.8% in June, down from June’s 52.3% 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 a bit 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:
Rather than burying its head in the sand, 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.
