While Australian consumers and businesses appear reluctant to borrow heavily at present, the same can’t be said for home buyers.
Outstanding housing credit increased by a further 0.5% in January in seasonally adjusted terms, according to the Reserve Bank of Australia, with growth in investor credit outpacing loans to owner-occupiers for a fifth consecutive month.
Investor housing credit grew by 6.6% over the past 12 months, topping annual growth in owner-occupier credit — up 6.3% over the same period — for the first time since January 2016.
The outstanding balance of all home loans currently sits at $1.6374 trillion, the highest level on record.
It has grown by 34.6% over the past five years, and a remarkable 98.1% from January 2007. In dollar terms, that’s an increase of $810.9 billion over the past decade.
Outstanding loans to owner-occupiers currently stands at $1.0652 trillion, nearly double the $572.2 billion level for investors.
Both stand at record highs.
According to the ABS, the value of Australia’s 9.8 million residential dwellings was $6.155 trillion as at the end of the September quarter last year.
Owner-occupier housing credit has grown by 88.7% over the past decade, with loans to investors growing by a larger 118.4%.
And those growth rates have been impacted by a number of borrowers changing the purpose of their loan due to interest rate differential between loans to investors and owner-occupiers introduced in mid-2015.
According to the RBA, the net value of switching of loan purpose from investor to owner-occupier is estimated to have been $49 billion from July 2015 to January 2017, including an additional $1 billion in January.
Updated capital city house price data for February will be released by CoreLogic on Wednesday.
It’s likely to reveal another hefty increase in house prices in Sydney and Melbourne, leaving the median dwelling value in both cities up more than 100% and 85% respectively on the levels of January 2009.