Credit demand for housing investment in Australia continues to run hot.
Data released by the RBA earlier today revealed total credit extended for housing investment soared by 10.4% in the year to March. Not only was it higher than the 10.1% pace seen in February but also marked the fastest annual acceleration seen since February 2008.
In December the banking regulator APRA, as part of its measures to monitor the quality and risk of housing loans, said that “strong growth in lending to property investors — portfolio growth materially above a threshold of 10 per cent will be an important risk indicator”. Investor credit for housing across the entire industry is now growing at 10.4%, which is arguably a material breach of that threshold.
Here’s the chart:
It also took total outstanding credit for housing investment to $A499.6b – an all time record high.
Adding to growing evidence of the increasing involvement of investors in the housing market, as a percentage of all outstanding housing credit, investment credit increased to 34.5%. That, again, was the highest level on record.
It’s pretty obvious that both in percentage and dollar terms, lending to this segment is growing fast.
APRA, following previous warnings, along with the RBA, will be taking note.