Investor Loans Slump Again in September

After three months of improvement, lending to property investors slipped 4 per cent in the month of September and remain 14 per cent down on a year ago.

Investor loans were hardest hit in Queensland, falling by 7 per cent, and Victoria, which recorded a 6.5 per cent decline. Investor loans now account for their smallest proportion—less than 25 per cent—of total loans since APRA began collecting loan commitments data in 2002.

Despite the retreat in investment loan commitments, owner-occupiers grew 3.2 per cent from August and is up 5.6 per cent year-on-year.

The latest housing finance data from the ABS shows that stimulus measures, rate and tax cuts combined with an easing in mortgage serviceability standards has propped up broader lending numbers for the fourth consecutive month.

The slight 1.1 per cent rise in new lending commitments in September follows a 3.8 per cent increase in August and a 4.2 per cent rise in July.

Loans to established dwellings saw a 5 per cent uptick over the month, growing a significant 9.2 per cent over the quarter, while new loans to upgraders and downsizers saw its largest month-on-month growth in more than four years—increasing a buoyant 6 per cent over September.

“With all major states seeing growth, there is a clear sign recent stimulus measures are working to encourage greater housing demand,” BIS Oxford Economics economist Maree Kilroy said.

“The suite of stimulus measures are yet to have an impact on new house construction.”

While the pace of decline in residential construction is easing, it is still trending downwards with 2020 expected to be the low year for house building.

“Off-the-plan apartment demand especially from investors is expected to take longer to recover than houses, with build quality issues weighing on sentiment,” Kilroy said.

Related: Construction Slump Will Trigger House Price Growth