The RBA released the latest round of private sector credit data this morning. Once again they reinforced that the primary beneficiary of the low-interest rate environment is housing.
UBS Chief Economist Scott Haslem reported the increase in credit outstanding of 0.6% month-on-month in January is the equal 2nd fastest month since 2008. This lifted the year-on-year rate to 6.2%.
That’s the fastest in 6 years, Haslem said.
While overall growth has been strong, housing is the key driver with Haslem pointing out that housing held at a 4-year high of 7.1% year on year for the 3rd month in a row. Investors are even more excited lifting to a 7-year high of +0.8% in the month of January and 10.1% in the 12 months to the end of January.
That’s important Haslem says because “credit remains fastest for housing investors” and while only marginally above the new APRA 10% threshold the “‘unbalanced’ nature of the housing market will likely increase the scrutiny on the macro-prudential policy response of the RBA (and APRA/Treasury) to contain risks in the housing market.”
If only Australian’s were as enamored with other investment opportunities as they are with housing.
The pool of savings that could be turned to solid income producing investments and industries would leave the economy in a much stronger position. Both now and in the decades ahead.