Falling home lending highlights housing downturn

Wednesday, 9 Mar 2016 10:40:46 | Thuy Ong

The number and value of home loans approved in January fell. (ABC News: Nic MacBean)

The latest figures from the Bureau of Statistics show bank lending to housing investors fell by 1.6 per cent in January to $11.4 billion.

Meanwhile, owner-occupied housing finance was down 3.9 per cent for the month, worse than analysts' expectations, to 55,786 home loans.

A Reuters poll of economists had forecast a dip of 2.3 per cent.

Government policy surrounding negative gearing has become a contentious political issue, with Prime Minister Malcolm Turnbull being urged by backbenchers to rule out changes to negative gearing or face a public campaign to preserve the current system.

The banking regulator APRA has also been cracking down on investor lending, particularly in the second half of 2015, with banks instructed not to grow their home lending to property investors by more than 10 per cent per annum and tighten loan criteria.

The move saw major banks raise some of their mortgage rates, particularly to investors, without the Reserve Bank having changed the official cash rate.

The latest housing finance figures show declines in owner-occupier approvals across major states including New South Wales, Victoria, Queensland, South Australia and Western Australia.

"The weakness in housing finance for January 2016 is broadly consistent with the trend seen over the second half of 2015 -especially in relation to the slowing pace of investor activity," said Deutsche Bank economist Phil Odonaghoe.

"[But] An improvement in auction clearance rates may see a tick-up in housing finance over coming months."

Elsewhere, the results from today's consumer sentiment survey showed some concern over Australia's property market as people consider paying down debt as the wisest place for savings, rather than investing in real estate or shares.

"We haven't seen the political factors come in, apart from some concerns over the taxation treatment of real estate investments," Westpac's chief economist Bill Evans told ABC News.

"But the big move has been the switch away from real estate towards paying down debt."

AustraliaPlus

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Falling home lending highlights housing downturn

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