The proportion of housing loans snapped up by investors hit a new high in August, highlighting the difficult task faced by the Reserve Bank.
The value of investor housing loans approved by banks and other lenders edged lower by $11 million to $11.39 billion, but the value of loans to homebuyers dropped by much more – $340 million – to $16.63 billion.
As a result, the share going to investors rose – from 40.2 per cent in July to 40.6 per cent in August.
That’s as high as it’s been in the data series stretching back to 1991, and well over the average of 30.9 per cent for that 23 years.
Aside from loans used to refinance owner-occupier home loans, the share going to investors hit 49.7 per cent in August, also a record and also far above the 36.5 per cent longer-run average.
This confirms the RBA’s recent, and repeated, assessment of the housing market as “unbalanced”.
On the other hand, the trend in lending appears to have flattened out.
The total value of housing loan approvals in August, using the ABS seasonally adjusted figures released on Friday, was only one per cent higher than six months earlier.
In the preceding six months, the value of approvals surged by 15 per cent.
Even lending to investors has slowed, with a rise of six per cent in the latest six months, versus a 21 per cent jump in the half year before that.
For homebuyers, the value of lending (aside from refinancing) fell by four per cent in the latest six months after a half yearly gain of nine per cent.
The building industry is still one of the few – albeit fading – bright spots in the economy’s transition from dependence on mining investment.
So the RBA will be loath to raise interest rates to bring investors to heel and risk the unwanted side-effect of squeezing homebuyers out of the market.
There’s also a good chance that a significant number of “investors” are actually people who have not yet bought their first home.
They may be trying to get into the market by taking advantage of tax concessions for investors, or buying into areas that are more affordable rather than where they want to live.
Either way, the RBA would prefer not to cause too much collateral damage with the indiscriminate weapon of higher interest rates.
So the push toward use of “macroprudential” tools – rules and regulations – to quell investor activity in overheated pockets of the housing market, as flagged last week by the RBA, should continue to gain momentum.
