Housing finance up – but will it last?


I keep track of finance approvals because this is a leading indicator for our property markets (in other it words changes before the market changes)

HouseAfter falling quite heavily in recent months, housing finance commitments posted a small rise in May according to the latest ABS figures.

While home buyers finances increases, loans to investors contracted further, continuing the weakness in the wake of APRA’s macro prudential policy changes.

ANZ Bank  report that theyexpect to see further tightening in credit conditions through the rest of 2018, which will continue to weigh on housing finance, prices, and building approvals.


Source: ANZ summary of ABS Stats

Here is ANZ’s report on the latest finance figures:

The value of monthly approvals is more than five per cent lower than a year ago.

Investors are the main driver of this weakness, edging down another 0.1% m/m, while the owner-occupier segment is performing better (+0.8% m/m).

The fall in investor demand is clearly related to APRA’s macro prudential policies (Figure 1).


In 2015, the 10% speed limit on investor borrowing saw a sharp drop in the presence of investors, and the subsequent limit on interest only loans in 2017 has had a similar impact.

Even the removal of the 10% growth limit, announced at the end of April 2018, is unlikely to drive renewed strength.

As a result, the share of new lending going toward investors is at the lowest level in several years (Figure 2).


The fall in investor borrowing is also seen in finance for the construction and purchase of new dwellings, which continues to fall.

This provides further evidence that we have moved past the peak in building approvals (Figure 3).


A central feature of our view on the housing market is that credit conditions continue to tighten through the remainder of 2018.

This is expected to result in further weakness in housing finance going forward, which will in turn weigh on housing prices and building approvals.


Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.


Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

'Housing finance up – but will it last?' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.


Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts