The value of lending to Australian housing investors soared in November, continuing the rebound seen following a regulator-enforced slowdown in 2015.
According to the ABS, the value of investor lending jumped by 4.9% to $13.269 billion in seasonally adjusted terms, the largest monthly total since June 2015 and the sixth increase reported in the past seven months.
From a year earlier, the value of loans to investors surged by 21.4%, accelerating on the 13.3% increase reported in October.
That marked the fastest year-on-year percentage increase since April 2015.
In comparison, lending to owner-occupiers rose by just 0.4% to $19.93 billion, more than ten times slower than the increase for investors.
Excluding refinancing, lending to owner-occupiers increased by 1.6% to $13.49 billion. Refinancing of owner-occupier loans fell by 2% to $6.44 billion, the smallest monthly total since August 2015.
Clearly higher interest rates are having an impact on that front.
Combined, the total value of housing finance increased by 2.2% to $33.199 billion during the month.
In original terms, the value of outstanding loans to owner-occupiers increased by 9.1% over the past year to $1.006 trillion, three times faster than the gain registered for investor loans which rose by 3.2% to $544.5 billion.
The latter figure is important given it’s well below the 10% annual growth ceiling introduced by Australian’s banking regulator, APRA, to minimise financial stability risks resulting from previous periods of rapid housing credit growth.
Mirroring the modest increase reported in the value of lending, the number of owner-occupier loan commitments edged up by 0.9% to 54,603.
The ABS said that commitments to purchase existing housing stock rose by 0.6% to 46,139, outpaced by a 3.3% increase in loans to buy a new dwelling which ticked up to 2,755.
Loans to owner-occupiers to construct a new dwelling also bounced, rising by 2.3% to 5,710.
The ABS does not release information on the number of investor loan commitments in its housing finance report.
In original terms, the proportion of owner-occupier loans to first-home buyers increased to 13.8%, up from 13.7% in October and above the multi-decade low of 12.9% seen in October 2015.
However, that figure still remains below the decade average of 16.3%, perhaps as a consequence of some first-time buyers entering the property market as an investors rather than owner-occupier.
David de Garis, director of economics at the NAB, said that the November housing report was yet “another piece of evidence pointing to the demand for investment housing lending as continuing to rise, despite some overall tightening in lending standards last year.”
While housing market activity is being increasingly dominated by investors, de Garis says that core demand for new dwellings from owner-occupiers is also showing somewhat more resilience than levels seen in prior years.
According to data from CoreLogic, Australian capital city house prices jumped by 1.4% in December, leaving the quarterly increase at 2.1%.
Over the year, prices soared by 10.9%, the largest percentage gain since 2009.
Prices rose by 15.5% and 13.7% in Sydney and Melbourne, favourite destinations for investors.