Housing finance (the value of home loan lending) is accelerating again.
According to data released by the Australian Bureau of Statistics on Wednesday, the value of new lending jumped by 2.3% to $32.041 billion in June, following seasonal adjustments.
While the value of lending to both owner-occupiers and investors rose, it was a 3.2% increase in the latter, some $11.785 billion for the month, that largely drove the headline figure.
After plunging in the second half of 2015, lending to investors is picking up, rising in four of the past five months.
The chart below from ANZ tells the story. The orange line, representing annualised growth in investor finance, is starting to rebound, leaving lending to first home buyers and upgraders wallowing in its wake.
Digging a little deeper, ANZ uncovered that the acceleration in investor lending was driven by one state in particular: New South Wales.
As a percentage of finance to investors, it’s rebounding again Australia’s largest and most expensive housing market, taking market share (of sorts) from other parts of the country, including Victoria.
“We expect tighter lending standards to continue to curb demand for housing finance, and have been surprised by the recent pick-up, albeit largely confined to New South Wales,” wrote Daniel Gradwell and Felicity Emmett, economists at ANZ.
However, while ANZ expects housing finance will cool in the period ahead, they warn that “if the RBA cuts the cash rate further, APRA may have to consider a further tightening of prudential measures”.
Not only that, given New South Wales, particularly Sydney, is the at epicentre of housing affordability concerns in Australia, and a favourite location for housing investors, a continuation of the current trend will no doubt reignite the debate over the merits of retaining negative gearing.
While there is currently some debate over the strength of its figures, CoreLogic puts the gain in Sydney property prices so far this year at 10.4%.
Last week, following the RBA’s rate cut, Sydney’s auction clearance rate came in at 80.4%, the highest level seen in a year.