Sydney property investors running riot: Pete Wargent

Sydney property investors running riot: Pete Wargent
Sydney property investors running riot: Pete Wargent
The ABS released its Lending Finance data for May 2015 which showed that low interest rates are encouraging greater borrowing across the economy.
 
While total lending was a little lower than in April on a seasonally adjusted basis, over the past year the data has strengthened considerably.
 
Owner-occupied housing finance has increased to a record high level, while personal finance borrowing is also now tracking at its highest benchmark on record.
 
Total lending finance for the month of $74 billion was an increase of 10% on the prior year figure, sending total finance commitments for the past 12 months surging 11% to $846 billion - the highest ever figure on this survey.

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Sydney property investors running riot

While property investor loans have evidently passed their peak for this cycle in Western Australia and the Northern Territory, elsewhere investor loans are trending upwards.
 
Indeed in New South Wales investor lending is exploding off the top of the chart, with the May 2015 result of $6.07 billion again comfortably the greatest ever month of investment lending in any state or territory.
 
Summarily, Sydney now has the highest ever level of investment lending in concert with the lowest stock on market levels we have seen. 
 
Egg on face for many of the property experts once again, though it should be noted here that the market regulator "should" now be targeting Sydney loans with a vengeance in order to dial back this exuberant level of demand.

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Charted below is the raw data for New South Wales, which shows that investor lending has increased by an extraordinary 137% over the three years since May 2012.
 
On a rolling annual basis, investor lending has increased by more than 30% over the past year - yet another monster increase.

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Although not charted here mainly due to laziness, May was also by a whisker the strongest ever month for investment lending in Victoria at $3.27 billion, taking rolling annual lending to $34 billion, a 22 per cent year-on-year increase.
 
May was another strong month for Queensland investor lending at $1.73 million. which takes the rolling annual figure 13.3 per cent higher than one year ago.
 
It has been a long yet steady recovery for Queensland investors since the financing nadir related to the 2011 floods.

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Investor lending was lower in the month of May in South Australia, but nevertheless on a rolling annual basis has moved 11% higher over the past year.

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Investor lending is now declining in Western Australia, albeit fairly moderately, with low borrowing rates sustaining borrowing for property investment at a historically high level.
 
 
 
The wrap
 
Overall, a strong result which suggests that total lending finance on an annualised basis may be heading towards $900 billion in due course, suggesting that easier monetary policy is taking effect.
 
Property investor lending continues to be exceptionally strong, particularly in Sydney and Melbourne.
 
And indeed the data suggests that this dynamic is now spreading to Hobart, Brisbane, and to a somewhat lesser extent, Adelaide.
 

PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and blogger.

His latest book is Four Green Houses and a Red Hotel.

Pete Wargent

Pete Wargent

Pete Wargent is the co-founder of BuyersBuyers.com.au, offering affordable homebuying assistance to all Australians, and a best-selling author and blogger.

Tags: 
Interest Rates Economy

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