The Australian Prudential Regulation Authority (APRA) released its quarterly data on Australian authorised deposit-taking institutions’ (ADI) exposures to property this week.
A thorough summary of the APRA release can be found at our research blog located here.
The March quarter data showed that investor lending continues to grow at a faster pace than owner occupier lending.
Additionally, the growth in debt related to investment housing continues to grow at an annual pace that is faster than the APRA guidelines of 10% per annum.
However, with the four major banks recently announcing changes to investment lending, the March quarter may represent a peak in the growth rate for this type of lending.
At the end of the March 2015 quarter, APRA reported that the total value of residential mortgages outstanding to Australian ADIs was $1.303 trillion, comprised of $852.466 billion in owner occupier lending (65.4%) and $450.169 billion in investor lending (34.6%).
On an annual basis, total lending to owner occupiers has increased by 7.2%, its slowest annual rate of growth since March 2014.
Investor lending has expanded by 12.4% over the year, its fastest annual rate of growth since September 2010.
The pace of interest only lending may be concerning to APRA, with the value of interest only loans rising by 15.3% over the year, taking the proportion of interest only loans to 37.4% which is a record high.
Over the quarter, we have seen a continuation in the decline in higher loan to value ratio (LVR) lending
Over the three months to March 2015 there was $9.149 billion in lending for LVRs over 90%, $17.885 billion for LVRs between 80% and 90%, $34.103 billion for LVRs between 60% and 80% and $21.160 for LVRs below 60%.
The value of lending for LVRs above 90% over the quarter was at its lowest level since the March 2013 quarter.
The Australian Bureau of Statistics (ABS) released construction work done data for the March 2015 quarter earlier this week.
The data showed that the value of construction work done fell by -2.4% over the quarter, with building work +3.3% higher, driven by a +4.8% increase in residential building and a 1.0% rise in non-residential building however, this was offset by a -7.3% fall in engineering construction.
Highlighting the slowdown in capital investment across the mining and resources sector, year-on-year engineering construction work recorded its largest ever fall, down -20.3% while residential building rose 11.4% and non-residential building rose 1.2%.
CoreLogic RP Data was tracking 2,599 auctions over the past week, which was an increase on the 2,232 auctions the previous week.
The weighted average clearance rate across the capital cities was 79.1%; the 11th consecutive week where the combined capitals clearance rate has been above 75%.
The largest auction market, Melbourne, saw 1,162 auctions held last week with a clearance rate of 82.1%.
Both the number of auctions (1,012) and the clearance rate (78.3%) were higher than over the previous week.
In Sydney there were 1,018 auctions with a clearance rate of 86.2% last week.
The number of auctions (885) and clearance rate (85.0%) was higher than the previous week.
Sydney auction clearance rates have now been above 80% each week since the Reserve Bank cut official interest rates by 25 basis points at the start of February 2015 and over the past six weeks the Sydney auction clearance rate has been above 85%.
Homes on the market
The number of new homes being advertised for sale has increased over the past week while total listings have fallen for the third successive week.
Total listings nationally are -3.5% lower than the number from a year ago while capital city listings are -5.1% lower.
Over the past four weeks there have been 42,272 newly advertised properties added to the market which is -7.9% fewer than at the same time one year ago.
A similar trend can be seen across the capital cities where 26,493 new listings hit the market over the past four weeks which is -9.1% lower than at the same time last year.
The number of new listings is lower currently compared to the same time in 2014 across all capital cities.
Meanwhile, although capital city stock is lower than a year ago, it is being fuelled by a significant decline in listings compared to a year ago in Sydney (-22.3%) and to a lesser degree Canberra (-13.4%), Hobart (-9.3%) and Melbourne (-7.9%).
Total listings are also lower than a year ago in Brisbane and Adelaide.
Note that the total number of properties listed for sale in Sydney (17,097) remains lower than each of: Melbourne (29,648), Brisbane (18,557) and Perth (20,194).