The latest housing finance data from the Australian Bureau of Statistics (ABS) revealed that the three months to October were the worst for housing loans to investors in over five years, according to Master Builders Australia.
The value of investor loans declined by 4.3% during the three months to October and 18.5% during the same time in 2017, according to the ABS.
“August 2013 was the last time investor lending volumes were as low as they are now. Lending to housing investors has fallen by over 30% since the peak in early 2015,” said Shane Garret, Master Builders Australia’s chief economist.
Garrett said that the introduction of stricter Australian Prudential Regulation Authority (APRA) regulations in early 2015 triggered the decrease in investor lending. Conditions worsened during the start of the probe into the banking industry by the Royal Commission – a move that caused lenders to become warier in releasing funds.
Additionally, falling home values discouraged investors from entering the market. “In other places, rental price growth is soft and investors have sat out,” Garrett said.
First-home buyers, on the other hand, are being pulled into the market. The first-home buyer share in owner-occupier housing loans is at 18.1%, marking the highest figure since late 2012. Nearly 114,000 first-home buyer loans have been issued over the past year – a hike of 14.9% on a year earlier.
“Despite the significant challenges the housing market faces, it is encouraging that so many Australians can look forward to celebrating Christmas in their very own home for the first time this year,” Garrett said.
