APRA is going to be disappointed – Investors are at it again!

APRA is going to be disappointed.

Property investors are back at it again. 

Housing finance posted a solid increase in August led by investors with loans to property investors rising at their fastest pace in nine months in August, pushing total lending to a new monthly high, official figures showed on Thursday.

The 4.3 per cent increase in lending commitments to investors, the biggest gain since November last year, lifted the monthly total to $12.6 billion in seasonally adjusted terms, according to the Australian Bureau of Statistics.

The following graph also shows how first home buyers are back in the market in response to the FHO boosts offered by the State governments of NSW and Victoria.

INVESTORS AND FIRST HOME BUYERS DRIVE HOUSING FINANCE

ANZ’s comments on these figures:

Overall demand for housing appears to still be solid, although the growth in first home buyer demand is unlikely to be sustainable given ongoing affordability issues.

Meanwhile, finance for the construction or purchase of new buildings continues to rise, posing some upside risk to our construction forecasts. 

• The value of housing finance commitments (excluding owner occupier refinancing) rose by 0.9% m/m in August. Interestingly, this was driven by the investor segment, which posted the
  largest monthly increase since APRA’s additional regulation was announced at the end of March. However, this only just offsets the large fall in the previous month, and investor borrowing is still lower than it was earlier this year. In annual terms, investor growth of 6.5% is well below the peak of 26% recorded in January.
• While owner-occupier borrowing was flat in August, the first home buyer segment again recorded a strong increase. The value of first home buyer commitments in August was 40% higher than a year ago. New stamp duty incentives in New South Wales and Victoria have supported jumps of 55% and 35% respectively in the value of FHB commitments in just two months.
• Finance for the construction or purchase of new dwellings continues to trend higher, with strength across New South Wales, Victoria and Queensland. Historically, this has been a good indicator that building approvals will follow suit. If this relationship continues to hold, it will provide some upside to our forecast that housing investment will flatten for several quarters, before starting to ease lower from mid-2018.

Source: ANZ Research