CoreLogic has produced this nifty infographic showing the breakdown between owner-occupier and investor housing finance in November last year, based off the most recent data set released by ABS.
Coincidentally, or perhaps not, the states and territories with the highest proportion of finance going to investors — New South Wales and Victoria — are also home to the capitals that have seen the fastest growth in house prices over the past 12 months.
Prices in Sydney surged by 16% in the year to January, and by 11.8% in Melbourne over the same period, according to separate data released by CoreLogic, amplifying the debate over housing affordability and the role that investors in these markets were exacerbating the problem.
While the figures are state-based, not for cities, it largely reflects what’s been happening in the Sydney and Melbourne markets due to their sheer size.
And while only for the month of November, the lift in investor finance in these states reflects the trend that’s been seen over the past year.
After a regulator-enforced slowdown in late 2015 and early 2016, investor finance is clearly accelerating again.
In its February monetary policy statement, released yesterday, the RBA said that “borrowing for housing has picked up a little, with stronger demand by investors”.
It also noted that conditions in some housing markets had “strengthened further” with prices “rising briskly”. While the RBA didn’t mention which markets it was referring to, it’s a safe bet that it was talking about Sydney and Melbourne given those were the capitals it discussed in the minutes of its December monetary policy meeting when it used a similar phrasing.
So the bank is aware of the acceleration in investor activity, and that house prices are rising briskly in the markets where they are most prevalent, Sydney and Melbourne.
However, as yet, the RBA doesn’t appear overly concerned.
“With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments,” it said in its February statement.
Given rental yields in these cities currently sitting at record lows, suggesting that speculation over further capital gain is fueling the recent acceleration in investor activity, it will be interesting to see whether the view expressed by the RBA will be mirrored by the actions of lenders in upcoming housing finance and private sector credit data.
The ABS will release housing finance data for December on Tuesday, February 14. That will be followed two week’s later by private sector credit figures from the RBA.
There’s sure to be more than a little interest in both.