CHART OF THE DAY: Australian investor lending for established properties jumped 104% in four years

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Investor activity in Australia’s housing market, especially for established dwellings, has been well documented of late. It’s created a debate – sometimes emotive – which will only intensify following the release of housing finance data for March earlier today.

In March the total value of lending to investors to purchase an existing dwelling rose to $A11.968 billion – a record high. Compared to lending to owner occupiers, excluding refinancing, it represents 55.6% of total dollars lent – also a record high.

The chart below shows the total monthly figure lent to purchase an existing dwelling.

It’s clear that there has been a dramatic shift in the composition of lending, particularly in recent years.

In March 2011, only four years ago, total lending for investment purposes stood at $A5.87 billion, some 44.5% of the total value lent to purchase an existing dwelling. Now, in March 2015, that figure has ballooned to $A11.968 billion, an increase of 104% in just four years. In comparison, lending to owner occupiers, excluding home loan refinancing, grew by 30.2% over the same time period.

In the past year the total amount lent to investors to purchase an existing property has grown by 18.3%. That’s far higher than what both APRA and the RBA would want.

With interest rates now lower and changes to negative gearing ruled out, at least for the upcoming fiscal year, the pressure on APRA to act is growing.

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