The 690.3% growth in lending to Australian housing investors, in two charts


Today the Reserve Bank of Australia will release its monthly financial aggregates report for June.

While not a noted market-mover, there will be one area of particular interest in this report given events of recent weeks – the growth of housing investor credit.

Here’s a couple of charts that explain the interest in this particular facet of the report.

The first shows the rolling annual increase in housing investor credit starting at May 1995, some 20 years ago. Back then, the annual growth in credit was $6.079 billion. Now, two decades later, that figure has risen to $48.043 billion, the largest amount on record.

The figure of May 1995 to that seen in May 2015 represents an increase of 690.3%.

Over the past year, housing investor credit grew by 10.45%, above the 10% threshold cited by APRA as the level that may see additional measures to cool its growth be put in place.

Understandably, the rapid acceleration in housing investor credit growth has seen the total amount of outstanding debt – that owed to the banks by investors – surge to $507.842 billion, also the highest level on record.

Given the rapid acceleration in house prices that accompanied the jump in housing investor credit growth, it goes some way to explaining why many of Australia’s largest banks, as directed by APRA, have announced significant changes to their lending practices for housing investment in recent weeks.

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