Data

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The Australian Bureau of Statistics (ABS) released building approvals data for August 2014 earlier this month.
At a headline level, dwelling approvals were 3.0% higher over the month and are now 14.5% year on year. With 16,810 approvals over the month there is clearly a strong level of residential development activity with monthly approvals just -5.0% lower than their recent peak.
<img src="/images/2014/10/8/Chart-1.jpg" alt="">
Of the 16,810 dwelling approvals in recorded over the month of August, 9,401 were for houses and the remaining 7,409 were mulit-unit dwellings (typically apartments).
Over the month, house approvals fell by -1.4% while unit approvals rose by 9.2%. Year-on-year, house approvals are 12.6% higher while unit approvals are up 17.1%. 
As the chart above shows, the six month trend indicates a slowing of dwelling approval numbers and it also shows that monthly movements in unit approvals tend to be much more volatile. Also remember that a multi-unit development is more risky than developing a single house and ultimately less likely to ultimately be constructed.
<img src="/images/2014/10/8/Chart-2.jpg" alt="">
Focussing on dwelling approvals on an annual basis we have seen more house and unit approvals than ever before over the 12 months to August 2014. Over the 12 month period there were 197,571 dwelling approvals, of which 111,020 were for houses and 86,552 were units. The annual number of approvals has increased by 19.2% over the past year.
Although approvals have surged, as the chart shows it is largely due to a significant lift in unit approvals. Although the number of unit approvals over the past year was at a record high, house approvals are still -6.8% lower than their previous peak over the year to July 2010 and -21.2% lower than their all-time high of 140,832 over the year to April 1989.
Historically, units have been much less likely to move from approval to construction. Units also tend to be much more likely to be owned by investors than houses. 
With the Reserve Bank flagging that deliberations are ongoing into the introduction of macroprudential policies to slow the level of investor activity in the housing market, there is potentially an even bigger than normal risk that these units won't make it to completion.
<img src="/images/2014/10/8/Chart-3.jpg" alt="">
Across the combined capital cities, there was an all-time high of 147,122 dwellings approved for construction over the 12 months to August 2014. The number of capital city dwelling approvals has increased by 21.9% over the past year. 
Over the year there were, 71,662 approvals for houses and 75,460 unit approvals with house approvals up 20.6% and unit approvals 23.2% higher.
Much like the national results you can see that unit approvals are at their higher levels while house approvals are only just approaching their previous peak levels.
This article continues on the next page. Please click below.
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<img src="/images/2014/10/8/Chart-4.jpg" alt="">
Across the individual capital cities, Brisbane has recorded the greatest increase in dwelling approvals over the year (41.8%) followed by: Perth (24.9%), Adelaide (24.0%) and Sydney (23.3%). Dwelling approvals are lower over the year in Darwin (-6.8%) and Canberra (-6.4%) while Melbourne (16.3%) and Hobart (19.4%) have recorded only moderate rises in dwelling approvals. 
Despite certain cities recording significant rises in dwelling approvals, Sydney and Melbourne have accounted for more than 57% of all capital city dwelling approvals over the past year. With 26,123 dwelling approvals over the past year, approvals in Perth are at a record high while Brisbane approvals are just shy of their record high.
<img src="/images/2014/10/8/Chart-5.jpg" alt="">
A key driver of the overall increase in dwelling approvals has been the rising prominence of the unit market. Over the past year, the increase in unit approvals has been greater than the increase in house approvals in Sydney, Brisbane, Adelaide and Perth.  Although unit approvals have recorded greater increases in these cities, there has been a substantial decline in unit approvals across Hobart and falls in both Darwin and Canberra.
<img src="/images/2014/10/8/Chart-6.jpg" alt="">
With more than half of all capital city dwelling approvals for units as opposed to houses, all individual capital cities except for Adelaide (31.8%), Perth (25.9%) and Hobart (7.0%) are seeing a majority of approvals for units. In Sydney, 67.7% of dwelling approvals were for units over the past year, elsewhere 53.0% were for units in Melbourne, 55.9% in Brisbane, 63.2% in Darwin and 57.9% in Canberra.
Sydney has consistently approved more units than houses since 1993 and Darwin has consistently approved more units than houses since 2003, while across the other cities it is a relatively new phenomenon.  
Melbourne has only been approving more units than houses since mid-2012, in Brisbane it has occurred since mid-2013 and in Canberra since mid-2010. Of course, there is an increasing level of demand for units, but particularly in Melbourne and Brisbane the number of units in the pipeline is largely untested in the market. 
Furthermore, units tend to be more appealing to the investor market rather than owner occupiers. While demand may currently be strong it remains to be seen whether there is enough investor demand to satisfy all of the supply in the pipeline.
Dwelling approvals remain at a very high level and with the rate of population growth slowing it is encouraging to see that supply is finally responding.  With their lower price point compared to houses and superior rental returns no doubt we are seeing a rising level of demand for units, particularly in inner city markets. 
Of course, the Reserve Bank of Australia has raised concerns about the level of investment lending which is most prominent for inner city units.
If controls are introduced to slow the level of investment there may be an adverse impact on demand and subsequently values of inner city units, particularly new inner city units which are a strong target from the investment segment of the market.
 
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ckusher-ujnxiKuFQs

Units are driving dwelling approvals, but will they get built?

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Time for an abridged gallop to sum up what's going on in Aussie housing markets.
Interest rates and inflation
First up, I have believed for some time that due to rising unemployment and inadequate jobs growth interest rates may need to fall further, which will in turn continue to support demand for housing. A recent Bloomberg survey of economists found that not a single one of them agreed with me on that point, however slowly but surely they are falling back into line.
Wages growth nationally remains sluggish at 2.6%, and, with evident slack in the labour market, non-tradables inflation has been declining as recorded in the chart below.
Although we haven't had an official Australian Bureau of Statistics (ABS) inflation reading since last month, the monthly TD-MI gauge is easing back towards the bottom of the 2% to 3% target band.
<img src="/images/2014/10/20/GRAPH14br-tradeinf-small.gif" alt="">
If this is followed by something similar in the official quarterly consumer price index that would leave the door wide open for another interest rate cut in 2015.
Note how futures markets now concur that there is more than a sporting chance of a rate cut in the first six months of 2015, and effectively zero chance of a hike.
<img src="/images/2014/10/20/GRAPH2.gif" alt="">
Demand: population growth
Our analysis of the latest quarter's population growth revealed our expected rotation away from the mining states with population growth slowing significantly in Queensland and Western Australia, but exploding higher in financials and services-focused New South Wales to nearly +115,000 over the year. And how:
<img src="/images/2014/10/20/GRAPH3.jpg" alt="">
The long term trend in our chart below continues to show that almost all of the material growth in population takes place in only the four main states.
One of several challenges facing South Australia in particular is a brain drain, a demographic scourge involving the best and brightest heading to Sydney and Melbourne which becomes evident through analysis of the net migration sub-indices.
To date, this net interstate migration from South Australia has been countered by net overseas immigration. But this will only work effectively and sustainably for the state if new jobs are created, which has not been happening for the past half decade, hence rising levels of unemployment. Something needs to change in this regard.
<img src="/images/2014/10/20/GRAPH4.jpg" alt="">
South Australia may rise to and overcome this challenge, I merely note the risks facing the local economy here, which seldom seem to be mentioned elsewhere.
Demand: jobs growth
The Labour Force survey is presently suffering from a major credibility deficit and has led to the ABS to be something of a figure of fun over recent months (harsh, given recurring budget cuts) with the apparent largest jobs 'gain' in history followed next month by a total reversal.
As a long term buy-and-hold investor I would always advise following the longer term trend anyway, but this is even more so now the case given that the seasonal monthly data has been proven to be so wildly volatile.
The data below underscores the point about the problem child that is the South Australian economy, with close to zero jobs having been created on a net basis for nearly five years.
The strongest economy for the past two years, as discussed here frequently, has been that of New South Wales, while the mining states are now transitioning from construction to production.
<img src="/images/2014/10/20/GRAPH5.jpg" alt="">
Below the long term growth in employment chart shows New South Wales to be in relatively good shape, but the southern states – and now to a lesser extent the mining states – struggling.
<img src="/images/2014/10/20/GRAPH6.jpg" alt="">
But perhaps the real story in the jobs market is the alarming gulf in fortunes being experienced between the prospering capital cities such as Sydney and Melbourne and the simultaneous hollowing out of the respective regional economies, as I explored here.
The total number of full-time employed in the regions of the main states now sits below 2006 levels, and this casualisation of the workforce may have surprisingly harsh negative impacts for regional housing markets in the decades ahead.
This article continues on the next page. Please click below.
 
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Demand: housing finance
The August Housing Finance data showed a slight decline on the preceding month, leading to a predictable knee-jerk response from commentators, but monthly data rarely rises (or falls) in a straight line and the trend in housing finance still looks to be strong overall.
<img src="/images/2014/10/20/GRAPH7.jpg" alt="">
The owner occupier housing finance data may have revealed the first signs of weakness in some states, but saw Queenslander financing looking particularly strong. Good times are ahead in Brisbane in 2015, it appears, after a lengthy wait.
<img src="/images/2014/10/20/GRAPH8ROLLING.jpg" alt="">
Last week the ABS Lending Finance data was also released, which details where investors are buying. It's a clear cut Sydney boom which we anticipated long ago.
<img src="/images/2014/10/20/GRAPH94c%20inv%20loans.jpg" alt="">
Supply: building 
Rather than regurgitate our extensive chart packs, just a few takeaway points here on dwelling supply.
At this stage of the property cycle plenty of new supply should be coming online, rental growth should be easing and property investors need to be wary of areas with a looming oversupply of dwellings.
Melbourne and Victoria continue to approve thousand of houses for construction, as has been the case for more than a decade.
<img src="/images/2014/10/20/GRAPH10.jpg" alt="">
However, it is actually apartments which generally represent the greater oversupply risk in this cycle.
Note that after an approvals boom, we now see Sydney approvals and construction rolling over and the risk of oversupply easing back, except in a few specific suburbs.
<img src="/images/2014/10/20/GRAPH11.jpg" alt="">
Apartments commenced are picking up very strongly in Queensland.
<img src="/images/2014/10/20/GRAPH12.jpg" alt="">
The apartments completed chart below underscores a key point – New South Wales has completed a meagre 17,500 units (as well as 19,100 houses) in the year to June 2014, which compares to state population growth of somewhere approaching 115,000 across the same time horizon.
<img src="/images/2014/10/20/GRAPH13.jpg" alt="">
The raw numbers should tell you straight away that the risk of a massive Sydney oversupply in aggregate is tenuous unless approvals and construction get a second wind, with the Greater Sydney population set to leap higher by almost 90,000 heads in only one year.
It is true that there is plenty more to come in the pipeline - Greater Sydney has approved just over 26,500 units in the year to August 2014, but this uptrend has already peaked some six months previously on a rolling annual basis, and is set to ease back to around 20,000 in due course.
House approvals also have risen very steadily in Greater Sydney to above 12,500 on a rolling annual basis, but even if 100 percent of these approvals in the pipeline make it through to commencement and then completion (which they won't) there is no pressing risk of a huge oversupply at this juncture.
Melbourne on the other hand already has a clear oversupply problem in existence in some inner locations, while the commencements data also shows that inner Brisbane is steadily getting around to constructing thousands of apartments.
Investors in attached Brisbane dwellings should steer away from those city locations with an oversupply risk and in particular purchase only properties with a point of scarcity (e.g. great outlook/river view/exceptional location).
This article continues on the next page. Please click below.
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Supply: stock and vacancies
Penultimately, Melbourne has absolutely stacks of stock on the market, about double that of Sydney, with an unprecedented 1800 Melbourne auctions coming right up on Cox Plate weekend. This will likely slow the market. Sydney has the opposite problem with a dearth of stock on the market while demand remains strong.
<img src="/images/2014/10/20/GRAPH14.jpg" alt="">
When markets move into the increasing supply phase vacancy rates should eventually rise, and this has happened to some extent in Melbourne and Perth with vacancy rates up at 2.5% on a city-wide basis. Perth investors should look for well-located houses over units and apartments, in our opinion.
Meanwhile Brisbane and Canberra have vacancy rates sitting around the national average of 2.2% on SQM Research's measures.
<img src="/images/2014/10/20/GRAPH15.jpg" alt="">
For all the expert talk of a Sydney oversupply, the harbour city's vacancy rate slipped back to just 1.7% in August.
Meanwhile, in further proof that real estate markets do cycle, the years of flat markets, lack of price gains and therefore moribund levels of dwelling construction in Adelaide and Hobart has resulted in low vacancy rates, and these markets could in turn pick up a little as a result.
Although I used to live in Darwin I haven't been up that way lately, so will just note here that there are just a few worrying indicators in the "Top End", with sliding prices, rising stock on market, signs of quite rapidly rising vacancy rates and a resources boom which is threatening to roll over.
The Darwin property boom may risk follow the mining boom back down from whence it came, so watch this space.
Dwelling prices
By this time of year most of the year's property market predictions have normally been conveniently forgotten about or subtly amended. Not ours! Let's see what we got right and what we didn't.
Our Adelaide 2014 market forecast was +0% to +3% capital growth, and RP Data's index has a year to date gain of 3.39% with a couple of months still to run.
<img src="/images/2014/10/20/16.jpg" alt="">
Brisbane and Gold Coast tracking nicely for our +2% to +5% capital growth prediction. Brisbane has some of the best prospects for 2015 and beyond after a lean half decade.
<img src="/images/2014/10/20/GRAPH17.jpg" alt="">
Melbourne looks set to do better than the top end of our +5% gain forecast, though from a macro perspective it does now seem likely that the market is set to slow up, with whispers afoot of the much-vaunted "buyers market" returning.
<img src="/images/2014/10/20/graph%2018.jpg" alt="">
The Perth market is holding up OK, and notably houses are faring much better than apartments on most indices. Our forecast is on track.
<img src="/images/2014/10/20/graph19.jpg" alt="">
The Sydney market has been rock solid and will finish 2014 ahead of our +6% to +9% capital growth forecast.
SQM Research believes that the Sydney market will replicate this capital growth once again with another 8% to 12% growth in the year ahead too. We'll release our own 2015 forecasts in due course as well as our 2015 <a href="https://allenwargent.com/" target="_blank">Buyers Eye</a> housing market outlook reports for London, Sydney and Brisbane.
<img src="/images/2014/10/20/graph20.jpg" alt="">
Overall we could yet score a hit with our forecasts on all five markets, but the Melbourne data needs to start slowing for that to be the case, which it just never quite seems to do.
Watch out for sliding unit rents at this stage in the cycle as new supply comes online. Owners of properties with a unique appeal, in an outstanding location or with a key element of scarcity value will of course have few problems with rental vacancies in 2015, but lower quality stock in other locations could see asking rents getting dropped or have issues securing tenants.
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pwargent-M4siyDbqQY

Australia's macro markets: the numbers you should know

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First home buyer data continues to be understated.
A point which has been much discussed over the past year: the non-sensical figures being reported as "fact" for levels of first home buyer activity.
Even until relatively recently the Reserve Bank (RBA) was producing stats for first homebuyers which suggested that numbers were abnormally low after a spike caused by home buyer grants.
<img src="/images/2014/10/13/graph1.png" alt="">
Some time ago, however, the Reserve gave up on reporting those figures since it was quite clear to impartial observers that with the withdrawal of first home buyer grants, a significant proportion of first time buyers were not being recorded as such.
For example in this month's Chart Pack, the RBA only reports the following, which is a strong and rising market. With no credible first home buyer data available, it is no longer reported:
<img src="/images/2014/10/13/graph2.gif" alt="">
What gives?
Unfortunately, despite this all being well known about for yonks, this has not stopped commentators from continuing to post the Australian Bureau of Statistics (ABS) figures uncritically, as though to imply that all first home buyers have been frozen out of the housing market by greedy investors.
While there has no doubt been a fair element of this happening, and particularly so at the margin and in inner city locations in Sydney and Melbourne, it never really made sense to suggest that first home buyers were casually sitting out of a rising market with disinterest. History suggests that is unlikely.
Had banks been requiring 20% deposits, thenyes, clearly this would have happened. But, unlike in the UK, lenders have generally not been requiring large deposits at all and high Loan to Value Ratio (LVR) loans have remained widely available (and in any case, outside Sydney, property price growth just hasn't been that strong over recent years), and thus unsurprisingly, first home buyers are still buying.
Look at the reported data for Western Australia, for example! A huge segment of the market has been first timers, between a quarter and a fifth of all buyers.
Listening to the data critically and understanding its message - generally, there have robust property markets, particularly in cities like Sydney - would surely lead you to the right conclusion.
Another point, which I touched on here back in March, is that a significant number of first time buyers in Sydney, have been buying investment properties as their first step on the ladder, thereby never being recorded as first-timers at all. Indeed, I have known from my own client base that it's a cast iron fact that the number of first homebuyers is understated... the real question is only "by how much?"
The problem is that we now have no true way of knowing the quantum of the issue, if indeed there is much of an issue on a national basis. Of course, there are always anecdotes about first homebuyers being outbid by "the Chinese" (i.e. anyone of Asian appearance), and investors do compete with first home buyers for properties (it's a market - that's life) but anecdotes also frequently lead to poor conclusions.
This article continues on the next page. Please click below.
 
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ABS confirms under-reporting
Not at all surprisingly, here is what the ABS reported in its Housing Finance release on Friday:
"A preliminary investigation has been conducted to evaluate the robustness of estimates of loans to first home buyers. In collecting this information, lenders are asked to report all loans to first home buyers. Concerns have been raised that under-reporting could occur if some lenders were only able to accurately report on those buyers receiving a first home buyer grant.
"Most data on first home buyers are collected by the Australian Prudential Regulation Authority (APRA). The investigation indicates that some lenders experience difficulty reporting on loans where the buyer is not receiving a first home buyers grant. Estimates of loans to first home buyers are therefore under review and users are advised to exercise caution in referencing this data.
"The ABS is working with APRA to explore options to make it easier for lenders to report correctly in future. In the meantime, the ABS is further investigating the potential for under reporting first home buyer data and the feasibility, if necessary, of estimating the extent of under reporting and adjusting the first home buyers estimates accordingly. The outcomes from the investigation will be published on the ABS website."
No shocks there.
From Shane Oliver, Chief Economist and Head of Financial Strategy at AMP:
<img src="/images/2014/10/13/AMP.jpg" alt="">
Indeed. As a sometime "first-time investor" (and thus, never being recorded as a "first time buyer") himself many years ago, to his credit Shane was always well aware of this issue.
Hot sectors of the market
Over the past year we have bought a lot of properties for clients in Wollstonecraft, Waverton and other Sydney lower north shore suburbs such as Neutral Bay.
The Sydney north shore market has been absolutely flying in 2014, with some properties recording huge gains.
A run-down wreck at 47a King Street, Wollstonecraft sold yesterday for an astonishing $2,230,000, a monster $830,000 over the reserve price. Meanwhile, 2 bedroom unit 14/4 Gillies Street in Wollstonecraft sold for $780,000, implying an uplift in the market of well over 10 percent in a matter of fewer than 6 months. John Howard will be pleased.
People have tried to torture the Sydney data a little lately to show that the market has been relatively soft (generally, it hasn't), but if you look at what has happened to individual properties, particularly in suburbs such as these, price action has been very hot.
Indeed, gains over the past year have been exceptional on the north shore in suburbs such as Milsons Point, Crows Nest and even Hunters Hill and a number if others, as well as in our old favourite inner west suburb, Erskineville, which notched a yet further 25% of capital growth in the past year. Huge returns.
<img src="/images/2014/10/13/graph4.jpg" alt="">
 
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First home buyer figures are still understated

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The Australian Prudential Regulation Authority (APRA) released data earlier on residential property exposures by Australian Authorised Deposit-taking Institutions (ADIs). The data was published up to the end of December 2014. The information provides additional insight into the nature of mortgage lending by Australian banks, building societies and credit unions.
<img class="aligncenter size-full wp-image-4309" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-11.jpg" alt="Chart 1" width="500" height="178">
According to APRA’s data, at the end of 2014, there were $1.278 trillion in residential term loans with $839.8 billion in owner occupied loans (65.7%) and $438.9 billion in investor loans (34.3%). Over the 12 months to December 2014, the value of residential term loans to owner occupiers increased by 7.4% compared to a 12.2% rise in loans to investors. Note that in December, APRA raised concerns about annual growth in investor loan books above 10%. Based on this data, many ADIs would be growing that segment of their book above that benchmark.
<img class="aligncenter size-full wp-image-4310" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-21.jpg" alt="Chart 2" width="500" height="180">
Focusing on the characteristics of these loans shows a growing appetite for loans with an offset facility and interest-only loans. Meanwhile, the prominence of low documentation loans and other non-standard loans is reducing. 
Based on the value of lending, loans with an offset facility increased by 18.4% year-on-year to December 2014, interest-only loans were 15.1% higher, reverse mortgages had increased 1.9% while low documentation loans and other non-standard loans had reduced by -18.6% and -20.2% respectively. 
At the end of 2014, a record high 37.5% of outstanding loans had an offset facility and a record high 36.9% were interest-only. Just 0.2% of loans were reverse mortgages, a record low 2.5% were low documentation and just 0.1% were other non-standard loans.
<img class="aligncenter size-full wp-image-4312" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-31.jpg" alt="Chart 3" width="500" height="183">
At the end of December 2014, the Australian Bureau of Statistics (ABS) estimated that there were 9,448,300 households, while APRA reported that there were 5,213,000 mortgages to Australian ADIs. This indicates that 55.2% of Australia’s housing stock was mortgaged to Australian ADIs. The 55.2% figure is the highest on record, noting that records have only been calculated from the September quarter of 2011. 
The ABS also reports the value of residential housing stock at $5.4 trillion and given the $1.258 trillion in outstanding mortgages to Australian ADIs, 23.3% of the value of all housing stock is mortgaged.
<img class="aligncenter size-full wp-image-4313" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-41.jpg" alt="Chart 4" width="500" height="179">
The average value of the outstanding mortgages, according to APRA’s data, was $241,400 at the end of 2014, with the average loan size having increased by 3.4% over the past year.  Loans with offset facilities ($285,900) and interest-only mortgages ($311,300) had much higher average loan sizes which have increased by 2.1% and 2.8% over the past year. 
Reverse mortgages had an average size of $93,100, having increased by 3.8% over the year. Low documentation loans had an average outstanding amount of $204,800 and other non-standard loans had an average of $211,900, outstanding loan sizes have fallen over the year -2.9% and -7.1% respectively.
<img class="aligncenter size-full wp-image-4314" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-51.jpg" alt="Chart 5" width="500" height="179">
Over the December 2014 quarter, there were 93,231 new loans written by Australian ADIs. 
Of these loans, 23,183 (24.9%) had a loan-to-value ratio (LVR) of less than 60%, 38,964 (41.8%) had an LVR of between 60% and 80%, 20,464 (21.9%) had an LVR of 80% to 90% and the remaining 10,620 (11.4%) had an LVR of more than 90%. 
Year-on-year, the number of loans with an LVR of more than 90% have fallen by 6.9%.  Over the same period, loans with an LVR of less than 60% have increased by 10.8%, loans with an LVR of 60% to 80% have increased by 13.1% and loans with an LVR between 80% and 90% have increased by 17.7%.
Given APRA had concerns of the rate of growth in the investment segment of the market, this latest data is likely cause APRA some discomfort.
Not only is this data showing the investment segment growing at a rate much higher than 10% annually, but also interest-only lending which tends to be reflective of investment lending is also increasing substantially. 
On a more positive note, although investment lending is increasing it is encouraging to see the drop in higher LVR lending above 90%, which suggests that ADIs are being somewhat more cautious around higher risk lending especially considering the overall number of loans being written has continued to grow.
We can expect the regulator will be monitoring lending standards with more focus after the release of this data, particularly from the perspective of investment lending and interest only mortages.
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Increasing investor interest-only borrowing likely causing APRA discomfort: Kusher

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The Australian Bureau of Statistics (ABS) released its Lending Finance data this week, and it was a pretty weak reading after a couple of apparently very strong months for commercial lending.
Total new lending fell by 10.3% in August from the previous month with a sharp 16% drop in commercial lending the driver of the result.
Owner occupier housing loans fell by 2% in the month of August on a seasonally adjusted basis, with most states seeing activity fall in the month (although notably not Queensland).
Note that the ABS classifies property investor loans separately from owner occupier loans and thus these come under the commercial lending header in the chart below.
<img src="/images/2014/10/15/1.jpg" alt="">
Year on year total new lending remains 11% higher, which is promising, and the rolling 12 monthly figures about do show that the overall trend has been a good 'un.
However, there is no getting away from the fact that August was a fairly rubbish result for commercial and business lending and quickly quells the enthusiasm of the markets from last month which saw some excitable claims that interest rates will be heading up imminently.
In short: No, they won't be.
Property investor loans
As for those property investor loans, in aggregate, property investor loans were pretty much flat in August on a seasonally adjusted basis.
On a trend basis, investor loans were down in all states, as one might expect. On a rolling 12 monthly basis, however, property investor loans across all of the main states continued to rise, with New South Wales and Victoria marching on to new heights.
New South Wales (read: Sydney) loans are a whopping 42.5% higher year-on-year on a rolling annual basis.
<img src="/images/2014/10/15/2.jpg" alt="">
Just looking at the straight raw monthly property investor loan data, New South Wales and Victoria are the clear standouts with 30% and 28% increases respectively.
Elsewhere activity has been softer, although evidently property investors are becoming more active in Queensland. Property investor activity has been solid in Western Australia and flat in South Australia.
<img src="/images/2014/10/15/3.jpg" alt="">
Macro-pru
Overall, it's not yet quite clear what this means for so-termed macro-prudential regulation to cool the investor market.
Clearly with property investor loans up very strongly over the past year, macro-prudential measures from the regulator (APRA) are very much in play in order to keep the proportion of lending to investors under some kind of check.
The August data taken by itself was far from alarming so there may be no knee-jerk announcements or reactions while the Reserve Bank and APRA await another month or two of data.
It's impossible to second guess these volatile data sets or indeed the actions of the regulator, although one generally gets the sense that dramatic macro-prudential measures are not really a preferred option.
Wayne Byres of APRA made the point the other day that although "people love the term" there is "nothing really new" about macro-prudential measures, which sort of implied moderation (to me at least).
I do just note in passing that AFG's more timely data for September showed record transactional activity for New South Wales as well as 49.7% investor loans.
<img src="/images/2014/10/15/4.jpg" alt="">
The Sydney property market marches on to new heights, and unlike in the previous boom cycle of a decade ago higher interest rates are not anywhere to be seen on the horizon in order to slow the market down (and vacancy rates remain much lower today too) - this cyclical boom will have to die of all age and of its own accord or be slowed by regulation.
 
 
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