Commercial finance a-slowin’…
Excluding property loans, low interest rates are not really stimulating commercial finance any longer.
In fact the ABS Lending Finance figures showed total commercial finance declining moderately once again in August.
In trend terms commercial finance has now been on the slide since May 2015.
As a result total lending finance is also about 9 per cent lower than it was in Q3 2015, even after accounting for a rebound in property investor loans over the past seven months.
Sydney investors return with a vengeance
I’ve been noting for a little while that property investor loans have been quietly creeping back in Australian month-on-month – and in New South Wales in particular – and now the cat is really getting out of the bag again.
Here are the raw original figures for NSW investor loans in calendar year 2016, not seasonally adjusted:
January $3.1 billion
February $3.9 billion
March $4.5 billion
April $4.5 billion
May $5.3 billion
June $5.8 billion
July $5.2 billion
August $5.5 billion
Remember these figures aren’t seasonally adjusted, so the original or ‘like-for-like’ figures over the past few years look like this:
August 2012 $2.7 billion
August 2013 $3.5 billion
August 2014 $4.6 billion
August 2015 $5.0 billion
August 2016 $5.5 billion
The equivalent figure during the financial crisis nadir in August 2008 was just $1.7 billion.
Ex-refinancing, investors in NSW are now accounting for nearly 50 per cent of loans again.
No other state comes remotely close to that, even Victoria.
Following last year’s macroprudential intervention, the value of property investor loans is now higher than a year ago in New South Wales, Victoria, Queensland, and South Australia, and activity looks to be rising again.
This means that as weaker results start to drop off, when plotted in rolling annual terms, the investor loans chart should be starting to turn up again.
And, so it is…
Even Darwin investor loans now seem to have found a base (as do those in Western Australia) – something I didn’t think I’d find myself saying in 2016 – with vacancy rates in the Northern Territory capital apparently now declining again.
The increases may look to be moderate to date in rolling annual terms.
But overall stock levels are well down on last year, hence the pressure on auction clearance rates in inner-suburban areas.
Sydney recorded a preliminary auction clearance rate of 80 per cent, with the median auction price running as high as $1,222,500.
It’s another leg up.