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Pull-back in investor activity a ‘positive sign’

15 April 2015 James Mitchell

Falling momentum in investor housing finance indicates warnings to lenders have taken effect, two leading economists believe.

The latest housing finance figures from the Australian Bureau of Statistics (ABS), released last Friday, show the seasonally adjusted series for the total value of investment housing commitments fell 3.4 per cent in February.

This follows a 0.1 per cent decline in January and a 6.0 per cent increase in December.

"I think it is a sign that the Australian Prudential Regulation Authority's (APRA) actions are having some effect,” HSBC chief economist Paul Bloxham told Residential Property Manager's sister title, Mortgage Business.

"Some pull-back in investor activity is a positive sign given the very high levels it has reached in recent months and the concern that it could lead to a housing bubble,” Mr Bloxham said.

"The authorities will be glad see some early signs that housing market activity may be shifting towards owner-occupiers and away from investors."

Meanwhile, AMP Capital chief economist Shane Oliver said the figures may be a welcome sign for the Reserve Bank, with investor finance showing signs of falling momentum.

“In fact, with investor housing credit at 10.1 per cent over the year to February, it's quite likely APRA has had a word with some lenders, forcing them to slow down, and this may explain the recent loss of momentum,” he said.

However, real estate industry figures have pointed to market forces to explain the fall in February’s investor finance figures.

Rob Elsom, director of Hockingstuart’s Carlton and Brunswick offices, said investors are holding back because they know another rate cut is likely to happen in the coming months.

“As a result, we’re seeing first home buyers who are desperate to get their hands on a property and make the most of the current low rates outbidding investors,” he said.

The number of first home buyer commitments as a percentage of total owner-occupied housing finance commitments rose marginally to 13.7 per cent in February, from 13.6 per cent in January.

Real Estate Institute of Australia president Neville Sanders said the statistics show that concerns about an overheating property market should be laid to rest.

“The February 2015 lending figures indicate a market that is moderating, with February being the 15th consecutive month of modest drops in lending levels if refinancing is excluded,” he said.

 

Pull-back in investor activity a ‘positive sign’
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