Property investors flee Australia’s mortgage market

The Reserve Bank of Australia has released mortgage data for June, which reveals that mortgage credit growth continues to soften, driven by fleeing property investors.

As shown in the next chart, overall mortgage growth fell to just 0.7% over the June quarter:

Growth has been dragged down by property investors where demand continues to fall, down 0.4% over the June quarter:

Annual mortgage growth has bottomed out at 3.1%:

However, demand from property investors has collapsed, with the stock of investor loans falling by 0.7% over the 2019-20 financial year:

It’s hard to see demand from investors returning anytime soon, given both property prices and rents are falling, alongside the massive glut of rental properties lying vacant.

Without the prospect of capital growth alongside falling rental income, there is little incentive to invest.

Unconventional Economist
Latest posts by Unconventional Economist (see all)

Comments

    • I’d like to see state by state, curious whether investor attention from the East has shifted elsewhere as it did last year.

  1. “#bullish. Think about it, the only way is up” – @_mumbling_me

    Above comment is plagiarised from twitter. I see on often this statement from that twitter handle and they say this without rhyme or reason! ๐Ÿ™‚

  2. Up 0.7% is still up …

    The reason to invest is that yields are falling everywhere

    Gold has a negative yield , and yet itโ€™s surging

  3. These charts are good for commenters such as Brenton to study.

    Quarterly credit growth on a downward trend for 4 years.

    Annual credit growth obliterated in a downward trend from over 20% in 2004 to less than 5% in 2020.

    Yet prices went exponential in that same period.

    But but Steve Keen said credit growth is the driver of house prices and he’s the Messiah and knows everything! And there’s no ammo left and it’s going to be epic armageddon carnage!

    • “Yet prices went exponential in that same period.”

      So, are you saying prices will go up?

      It’s one thing to whinge and waffle, but what’s your position at this point in time?

  4. Until the whole thing is negative, not just less growth, is when I will get slightly optimistic about Australias housing bubble. After all, the population just stopped growing which should have been instant zero growth.

    • Jumping jack flash

      Dont worry, the falling growth is enough to bring it down.

      After debt growth fell over in 2008 it never came back again. Only by cutting interest rates down to 0.25 and importing a ton of slaves to steal wages from were they able to wring out any debt growth at all for the past decade.

      Their actions were all about postponing the inevitable. Fortunately the virus has exposed them.

      The government has injected 300 billion into the economy in the name of the virus but it doesnt come close to being enough to make up for a decade of missing debt growth. For that, they needed 600 billion, and probably much more now because total mortgage debt is dropping like a stone.

      • Makes sense. However I’m always amazed how lucky this government and the last 25 years worth of government for that matter have been, economically speaking and same for the property speculators and other government sponsored parasites. You think they’ve broken it but then another rabbit pops out of their arses.

        • Jumping jack flash

          Oh the 00s were easy to get debt growth: coming off the back of a recession that cleared out a lot of debt with 18% interest rates or something ridiculous like that, and then Howard dropped interest rates “out of cycle” which was code for pure manipulation. The result was not surprising at all.

          We werent the only country doing this of course. We also werent the only country with a recession in the late 90s either.