Investor loans in decline: Pete Wargent

A quick look at half a dozen of the more interesting housing finance slides for January 2018.

Total housing finance increased by +0.7% in seasonally adjusted terms to $33 billion, but was pretty flat in trend terms, with investor loans continuing to decline and owner-occupier lending growing at +7% per annum to fill the breach.

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January is generally a quiet month due to summer holidays, but first homebuyers continue to be drawn into the market by concessions, now accounting for a market share of 18% in the month. 

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While first homebuyers are on average struggling to increase their loan sizes due to serviceability caps and stress-testing at above 7% mortgage rates, established owners have been able to use more leverage. 

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That's especially true in Victoria where the average loan size for non-first homebuyers hit a record high. 

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Surge of completions

A number of indicators have suggested that the Sydney market saw a huge number of dwelling completions in or around the final quarter of 2017, as construction activity now drops back from record highs and a spike in vacancy rates is observed. 

The number of finance commitments for new dwellings is coming down off four-decade highs.

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New South Wales has seen more new dwellings financed by homebuyers than ever before over a 12-month stretch, underscoring the point. 

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The wrap

Overall, if you piece this together with other figures out recently including from APRA, the stats point toward a surge in apartment completions in Sydney, and investor lending being quelled as first homebuyers are increasingly drawn into the market by stamp duty and other concessions.

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