Housing Investment

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<p><img src="/images/2015/11/26/NEW_RAMS_LOGO.jpg" alt=""></p>
<p>In even the most perfect property, you'll find little details you'd like to fix or change when you move in.</p>
<div id="tt-wrapperd8fb38b" class="tt-wrapper inread "><span style="line-height: 1.3em;">In most homes, the flaws may be minor but before you buy, it’s wise to have the building inspected for major maintenance problems, structural faults and pest infestations. </span></div>
<p>Building and pest inspection reports typically cost a few hundred dollars each up front but may alert you to problems that could cost thousands to repair in the long run. </p>
<p>If the property you want is up for auction, any reports will have to be done before the auction. </p>
<p>If you're buying privately, you could make your offer conditional on obtaining inspection reports on terms satisfactory to you, so the inspections can be done between acceptance of your offer and exchange of the sale contract or during any cooling off period. </p>
<p>You might be able to use the information you gain from a building or pest inspection to negotiate a better price for the property or have the vendor rectify a problem so you don’t have to deal with it after you’ve purchased. In any case, it’s better to be forewarned of potential issues than to get a nasty surprise after you’ve moved in.</p>
<p><span>INSPECT IT YOURSELF</span></p>
<p>Before professional assessment, inspect the property yourself.</p>
<p>Even without professional training, you may be able to spot areas of concern. When you visit a property, consider whether it looks well-maintained. Look for warning signs that warrant further investigation such as cracked roof tiles, rusty gutters, damp patches on walls and ceilings, and cracks in the brickwork.</p>
<p>Sometimes owners will try to cover up problem areas by painting or wallpapering over them, or using quick fixes that won’t last in the long run. These may be difficult for the untrained eye to pick. A qualified building inspector will be better able to spot any deficiencies in the property.</p>
<p><span>PROFESSIONAL ASSESSMENT</span></p>
<p>Ask around for recommendations of a licensed builder, surveyor or architect to conduct the inspections. Otherwise you could find contact details through the Australian Institute of Building Surveyors, Master Builders Association, the Australian Institute of Architects, or a similar professional body. The report the inspector provides should comply with the Australian Standard for building inspections (AS 4349.1) and the inspector should have adequate professional indemnity insurance coverage. </p>
<p>The inspector should look for structural faults and damage to all accessible areas of the building as well as sheds, pergolas, fences and swimming pools.</p>
<p>Pest inspections may identify old or active termite damage, and evidence of other vermin such as mice or rats. </p>
<p>Quick tip: An inspector may not be able to access all areas of the property so they may not uncover all of a property’s flaws but they should be able to identify major defects.</p>
<p> </p>
<p>TO FIND OUT HOW RAMS CAN HELP EASE YOU THROUGH THE PROCESS, GET IN TOUCH WITH YOUR LOCAL RAMS HOME LOAN EXPERT OR DROP IN FOR YOUR <a href="https://ad.doubleclick.net/ddm/clk/297886977;125002163;s" target="_blank">FREE FIRST HOME BUYERS’ GUIDE</a>.</p>
<p>For more great property advice and tips on buying your first home from RAMS subscribe to <a href="https://ad.doubleclick.net/ddm/clk/297890194;125002164;f" target="_blank">The Great Australian Dream property series</a>.</p>
<p><span>For your free </span><em>Property Observer</em><span> eBook from RAMS, <em>12 tips for first-time buyers</em>, </span><span>covering</span><span> </span><span>everything</span><span> you need to know when it comes to purchasing property, <a href="component/content/article?id=48727" target="_blank">click here</a>.</span></p>
<p><em>Disclaimer: Information in this material is general and does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. You should also obtain independent professional advice relevant to your financial circumstances.</em></p>
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Pre-purchase inspections

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<p>GDP grew by 0.9%qtr in Q3, broadly as anticipated (market median 0.8% and Westpac 0.9%).</p>
<p><span>Annual growth rebounded to 2.5%, which was a little firmer than expected (market 2.4% and Westpac 2.3%).</span><span> </span></p>
<p>Economic conditions remain uneven and choppy from quarter to quarter.</p>
<p><span>In Q3, exports (resources and services) were once again the key growth engine, business investment and public investment were major negatives, housing is responding to low interest rates and consumer spending strengthened a little on firmer wage income numbers. The global backdrop and the income environment remain challenging, with the terms of trade down a further -2.3%qtr, -10.4%yr in the quarter.</span><span> </span></p>
<p><span>The details</span></p>
<p>Net exports contributed 1.5ppts to Q3 growth, more than reversing a surprise 0.8ppts subtraction in Q2.</p>
<p><span>Exports are a key growth engine, +4.6%qtr, as the mining boom pays dividend and as service exports (education, travel and business services) advance, boosted by the lower AUD.<br></span></p>
<p><span>Also, imports contracted in Q3, -2.4%qtr, including a sizeable fall in service imports as the lower AUD dollar bites, encouraging Australians to redirect spending from overseas to domestically – particularly travel, as well as retail.</span><span> </span></p>
<p>New business investment contracted by a sizeable -4.6%qtr, -11.0%yr.</p>
<p><span>The mining investment downturn is a sizeable headwind and will remain so into 2016. In addition, non-mining investment weakened in the quarter, with declines in equipment spending and non-residential building.</span><span> </span></p>
<p><span>Public demand, having surprised with a 2.2% jump in Q2, reversed, down 0.9% in Q3, including a hefty 8.2% drop in investment.<br></span></p>
<p><span>Going forward, public demand is unlikely to be strong, but a rebound from this sizeable fall is in prospect. Of note, NSW and Victorian state governments are embarking on new transport infrastructure projects.</span><span> </span></p>
<p>Household consumption provided a positive surprise, strengthening a little to grow by 0.7% in Q3, following a 0.6% rise in Q2 (revised up from 0.5%). Annual growth grinded higher to 2.7%, up from 2.5%.</p>
<p><span>Wage incomes were a little more supportive in the quarter, up 1.1%qtr, reflective of stronger employment results. In addition, households allowed their saving rate to shift a little lower, to a still high 9.0% from 9.4%.</span><span> </span></p>
<p>Home building activity grew by 0.9%, with new dwelling construction up a solid 2.0%qtr and a strong 12.8%yr in response to record low interest rates and pent-up demand. However, renovation work slipped, down 0.9%qtr, following a 2.4% rise.<span> </span></p>
<p>Domestic demand contracted by a sizeable 0.5%qtr in Q3, the largest decline since early 2009, reflective of the weakness of business investment and public investment in the period. Over the year, domestic demand grew by 0.8%.<span> </span></p>
<p>Across the three estimates of GDP</p>
<p><span style="line-height: 1.3em;">The expenditure measure printed at 0.9%qtr, 1.9%yr</span></p>
<p><span style="line-height: 1.3em;">GDP Income was 1.1%qtr, 3.1%yr</span></p>
<p><span>GDP Production was 0.8%qtr, 2.6%yr</span><span> </span><span> </span></p>
<p><strong>Implications for Monetary Policy</strong></p>
<p>The Reserve bank will be encouraged by this report. Recall that at this time last year the September 2014 report printed 0.3% compared to the current print of 0.9% with through the year growth slipping a little to 2.7%.<span> </span></p>
<p>This time through the year growth has lifted from 1.9% to 2.5%. In particular household spending has printed 0.7% compared with a disappointing 0.5% last year and growth in annual household spending has been boosted from 2.5% to 2.7%. A modest fall in the savings rate from 9.4% to 9.0% also points to consumers being prepared to supplement modest income growth to lift the pace of spending.<span> </span></p>
<p>The Bank will also find the large contribution to growth from net exports provides some encouragement from an employment perspective with net services exports playing a more prominent role than a year ago.<span> </span></p>
<p>While last year Westpac interpreted the September quarter national accounts as providing a key justification for its forecast of a February rate cut we see no comparable case here. While markets held a 25% chance of a move in February we expect that as they have time to digest this result those folks favouring another move will be forced to push the timing out to May.<span> </span></p>
<p>For our part we remain comfortable with our call that rates will remain on hold in 2016 with downside risks.<span> </span></p>
<h2>Strategy</h2>
<h2><strong>For the AUD</strong></h2>
<p>AUD/USD approached the GDP data at 0.7325, consolidating its gains in NY trade. The 0.9% headline was a touch above consensus, producing an AUD/USD bounce to a high of 0.7345. This was a fresh high since 15 October. However, within 20 minutes the Aussie was back to 0.7315/20. Given that the details of the report were mostly encouraging and that RBA governor Stevens (speaking in Perth) deemed the data “not a bad outcome” and a touch higher than the RBA had expected, the AUD pullback suggests some fatigue after its sharp rally.</p>
<p><span><em>Bill Evans </em></span><em>is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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Economic conditions uneven and choppy from quarter to quarter: Westpac's Bill Evans

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<p><span>As a result of new lending criteria delivered to deposit-taking institutions by Australian Prudential Regulation Authority (APRA) a lot of attention has been placed on the pace of lending for residential housing investment. </span></p>
<p><span>The APRA guidelines highlighted a limit on annual investment </span><span>credit growth for ADIs of 10% however, from that point until June 2015 the annual rate of investment credit growth continued to increase.</span></p>
<p><a href="/images/2015/09/03/Screen%20Shot%202015-09-03%20at%2012.30.35%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/03/Screen%20Shot%202015-09-03%20at%2012.30.35%20PM.png" alt=""></span></p>
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<p><span>Although it’s only one month of data, the latest housing credit </span><span>data to July 2015 suggests that we may be finally set to see a </span><span>slowing of investment credit growth. </span></p>
<p><span>Over the 12 months to July 2015, the Reserve Bank (RBA) reports that total housing credit rose by 7.4%; its fastest annual rate of growth since October 2010, and consisted of a 5.3% annual increase in owner occupier credit (fastest growth since March 2012) and a 10.8% annual rise in investor credit.</span></p>
<p><a href="/images/2015/09/03/Screen%20Shot%202015-09-03%20at%2012.31.43%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/03/Screen%20Shot%202015-09-03%20at%2012.31.43%20PM.png" alt=""></span></p>
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<p><span>Investor housing credit is still growing at a robust pace however, at 10.8% over the year it is down from </span><span>11.1% in June and at its lowest level since March 2015. “In fact, </span><span>the monthly investor housing credit data shows credit advanced by just 0.6% in July which was its lowest monthly increase since </span><span>October 2013. </span></p>
<p><span>Investment segment lending data on the investment segment </span><span>suggests that following recent changes to lending policies by Australian ADIs, lending to the investment segment of the market is set to slow further over the coming months. </span></p>
<p><a href="/images/2015/09/03/Screen%20Shot%202015-09-03%20at%2012.32.48%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
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<p><span>With mortgage rates remaining low we would anticipate the rate of </span><span>growth will slow to around the 10% per annum benchmark, </span><span>however this is unlikely to drop much further than that.</span></p>
<p><span>While any slowdown in investment growth may have an impact on </span><span>overall housing credit figures, Mr Kusher noted that it’s important </span><span>to recall that a much greater proportion of overall lending goes to owner occupiers. </span></p>
<p><span>In July 2015, the total value of outstanding housing credit was $1.476 trillion. This figure was comprised of $906.4 billion in lending to owner occupiers and $569.8 billion to investors. </span></p>
<p><span>I</span><span>t’s important to remember that the rate of </span><span>growth in owner occupier lending has also been rising although over the past year there was a $45.2 billion expansion in credit to owner occupiers compared to $56.1 billion to investors. Furthermore, the proportion of total mortgage credit to investors is at a record high 38.6%. </span></p>
<p><span>ADIs of course don’t lend exclusively for mortgages and the latest </span><span>data shows an encouraging lift in credit to businesses. In July 2015 business credit rose by 0.7% to be 4.8% higher over the year. Total business credit is currently recorded at $799.7 billion, which is significantly larger than investment housing credit.</span></p>
<p><a href="/images/2015/09/03/Screen%20Shot%202015-09-03%20at%2012.33.38%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/03/Screen%20Shot%202015-09-03%20at%2012.33.38%20PM.png" alt=""></span></p>
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<p><span>The RBA and APRA are likely to be very encouraged to see the </span><span>first signs of a slowing of lending to the investment housing segment and would hope that it continues over the coming months. </span></p>
<p><span>While this may result in a slight slowing in overall housing credit growth increases, this shouldn’t be viewed as a negative outcome. </span><span>If the recent increase in business credit can continue it would </span><span>arguably provide greater economic benefit. </span></p>
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<p><span><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></span></p>
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Has growth in investor housing credit reached its apex? Cameron Kusher

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<p><span>The Australian Bureau of Statistics (ABS) released housing finance data for August 2015 earlier this week.  </span></p>
<p><span>The data broadly showed a further pick-up in owner occupier lending and a slowing in investor lending. It is important to reconcile this against numerous reports that many mortgagees have been quick to advise their lenders that their properties which were formerly investment properties are now in fact owner occupied. </span></p>
<p><span>This is due to the fact that most lenders are now charging a premium for investment mortgages.</span></p>
<p><a href="/images/2015/10/09/Chart-11.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/09/Chart-11.jpg" alt=""></span></p>
<p> </p>
<p><span>The above chart details the components of those borrowing over time. What’s immediately noticeable is that while there has been a recent surge in lending to investors, over recent months there has been a clear fall in lending to this cohort. </span></p>
<p><span>While investment lending is slowing, owner occupier lending is rising however, there has been very little bounce in lending to first home buyers. For the most part the rise in owner occupier lending is being fuelled by an escalation in both refinances and borrowing for new loans to non-first home buyers. Again, it is important to note some of these figure may be being affected by re-classifications of mortgages.</span></p>
<p><a href="/images/2015/10/09/Screen%20Shot%202015-10-09%20at%203.59.33%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/09/Screen%20Shot%202015-10-09%20at%203.59.33%20PM.png" alt="" width="785" height="305"> </span></p>
<p><span><span>In August 2015, owner occupiers committed to $20.8 billion worth of housing finance, a 6.1% rise over the month and a 26.5% year-on-year rise.  Looking at the components of owner occupier lending there was $1.7 billion in lending for construction of dwellings, $1.2 billion in lending for purchase of new dwellings, $6.4 billion in refinances of established dwellings and $11.5 billion for purchase of other established dwellings. </span></span></p>
<p><span><span>The 6.1% monthly rise in owner occupier lending was largely fuelled by a 10.4% rise in lending for purchase of established dwellings however, each component rose.  Refinances have typically been the greatest source of growth in owner occupier lending however, they recorded the slowest growth of any segment over the month.  Looking at year-on-year changes, lending for construction of dwellings rose 0.5%, lending for purchase of new dwellings rose 17.6%, refinances of established dwellings rose 26.7% and purchase of established dwellings increased by 32.6%.  </span></span></p>
<p><span><span>Over the coming months we will be watching closely to see whether the growth in owner occupier lending can be maintained, particularly in the face of falling population growth and no real increase in activity from first home buyers.</span></span></p>
<p><a href="/images/2015/10/09/Chart-31.jpg" target="_blank"><span><span>Click to enlarge</span></span></a></p>
<p><span><span><img src="/images/2015/10/09/Chart-31.jpg" alt=""></span></span></p>
<p> </p>
<p>Switching the focus to the investor segment, there was $13.6 billion worth of commitments to investors in August 2015. The value of lending to investors was -0.4% lower over the month but 12.0% higher year-on-year. It was also the first time in 13 months that the value of new lending (excluding refinances) was greater to owner occupiers than it was to investors.</p>
<p>Over the month there was $0.8 billion in lending for construction of dwellings and $12.7 billion in lending for established housing. Over the month, lending for construction of dwellings fell -22.0% while commitments for established housing rose 1.4%. Year-on-year lending for construction of new homes is -2.5% lower and lending for established homes is 13.1% higher.</p>
<p>The data appears to indicate that there is a change occurring in the mortgage lending market. Whereas investors and owner occupier refinances have been the primary drivers of growth lately, it seems as if this is now tilting to owner occupier new loans starting to dominate. Given that investment mortgages generally now have a higher interest rate than owner occupier mortgages, it may be playing a role in the tilt towards owner occupier lending. </p>
<p>Furthermore, value growth has been strong for more than three years in Sydney and Melbourne and investors may be becoming concerned about the longevity of the boom while growth outside of these cities has been sedate. </p>
<p>Once you also consider a record high pipeline of residential construction accompanied by a record low rate of rental growth and historical low yields perhaps a growing number of investors are looking towards other forms of investment they perceive as less risky at this stage in cycle. It’s still early days for the slowdown in investment lending but we, along with the RBA and APRA, will be watching closely to see whether the slowing in investment lending and the rise in owner occupier lending persists over the coming months. </p>
<p>It is also going to be interesting to see what impact this has on overall demand for housing over the coming months in lights of evidence of a bit of a softening in the Sydney housing market.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></p>
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Owner occupier housing finance commitments take a step up: Cameron Kusher

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<p>Despite the recent slowdown, housing finance data highlights that investor activity in the housing market is starting to rise again and when you look at total returns from housing it’s no surprise.</p>
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<p>The CoreLogic RP Data Accumulation Index which has been published since June 2009 highlights the total returns from residential property.  The total returns include both the increase in values as well as gross rental returns.  </p>
<p>The first chart shows the annual change in the total returns (accumulation) index over time. While combined capital city home values recorded longer and deeper falls during 2011-12, total returns were negative for only a short period of time thanks to the uplift from rental yields. More recently you can see that the annual change in total returns across the combined capital cities has remained quite strong.</p>
<h3>Combined capital city annual changes in total returns for houses and units</h3>
<p><a href="/images/2016/06/09/2016-06-06--img1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/06/09/2016-06-06--img1.jpg" alt=""></p>
<p><br><br>Over the 12 months to May 2016, combined capital city home values have increased by 10.0 percent while total returns have been recorded at a higher 13.9 percent. Looking at the individual capital cities, all cities except for Perth have recorded positive total returns over the past year. Sydney and Melbourne which have been the most active investment markets have seen the highest total returns at 16.9 percent and 17.5 percent respectively over the past twelve months. It should be noted that gross rental returns in both of these cities are now at record lows highlighting that the majority of these returns have come via an increase in home values.</p>
<h3>Annual change in capital city total returns, 12 months to May 2016</h3>
<p><a href="/images/2016/06/09/2016-06-06--img2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/06/09/2016-06-06--img2.jpg" alt=""></p>
<p>The third chart highlights the total returns over the past five years across all capital cities. Again, Sydney in particular, has seen far superior total returns compared to all other capital cities. </p>
<p>Melbourne has also experienced relatively strong total returns over the past five years. </p>
<p>Again this highlights why these two cities in particular have remained so popular with investors. In all other capital cities returns from residential property have been positive.  In many of these cities the total returns have been driven more so by the rental returns rather than the capital growth which has been the key driver in Sydney and Melbourne.</p>
<h3>5 year total change in total returns, to May 2016</h3>
<p><a href="/images/2016/06/09/2016-06-06--img3.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/06/09/2016-06-06--img3.jpg" alt=""></p>
<p>Despite the recent rebound in value growth, the mature capital growth cycle and record low rental returns in Sydney and Melbourne, total returns are unlikely to be as strong in these cities over the coming years. A more balanced investment approach which focusses on moderate capital growth and relatively strong rental returns is likely to be a superior housing investment profile over the coming years. </p>
<p>This data also highlights why housing investment has been so popular. In a low interest rate and subsequently low return environment housing has, over recent years, offered attractive returns. Whether this continues to be the case remains to be seen.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
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Total property returns show why housing investment remains so popular: CoreLogic

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<div>I took a look at the Housing Finance figures for December previously. In this post, I'll just add a few sundry thoughts.<br><br>There are always plenty of angles put forward for why the housing market must be struggling, or will be set to struggle in due course, true enough.<br><br>And indeed, some locations are struggling, no question about that - mainly comprising mining towns, or regions being heavily impacted by the ongoing collapse in mining investment.<br><br>Anecodotally, mortgage lending has also perhaps been a little bit slower in January. </div>
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<div>It was interesting to note, however, that the raw original data (without seasonal adjustments applied) recorded $35,961,746,000 of dwelling finance commitments in the month of December, an increase of $2.3 billion or +6.7 per cent from one year ago.</div>
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<div>I'm no incurable optimist, but there's not too much wrong with the health of the lending market on that evidence. In fact it was the highest figure ever recorded for a single month.</div>
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<div><a href="/images/2016/02/15/A7.jpg" target="_blank">Click to enlarge</a></div>
<p><img src="/images/2016/02/15/A7.jpg" alt=""> </p>
<p><span><span>Refinancing is evidently a complicating factor, as you can see in the chart above, but the value of loans actually advanced in December was up by +24.6 percent to its highest ever level at $23.8 billion.</span></span><br><br><span>I noted on </span>Twitter<span> last week that the average loan size figures seemed to have gotten a little ahead of themselves, and sure enough there was a pullback in December to a somewhat more believable $377,600, althought this is still +11.2 per cent higher than one year ago, and the figure still looks rather overstated. </span></p>
<p><a href="/images/2016/02/15/A2.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/02/15/A2.jpg" alt=""></span></p>
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<p><strong><span style="text-decoration: underline;">Construction continues</span></strong><br><br></p>
<div>Much has also been written about the imminent downturn in residential construction sector. </div>
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<div>In one sense this is a truism since construction activity is also now tracking at its highest every level, and clearly this dynamic cannot continue in perpetuity. </div>
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<div>However, the most recent housing finance figures suggested that there is still a fair amount of juice in the tank. </div>
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<div>The rolling annual value of commitments for investor construction, which is a handy indicator if not anything more concrete than that, is up by +27.6 percent from one year ago. The equivalent figure for owner-occupier purchase of new dwellings is up by +15.7 percent.</div>
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<div><a href="/images/2016/02/15/A4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/02/15/A4.jpg" alt=""></div>
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<div><span>The number of commitments for new dwelling purchase also jumped in December to 3,579 in original terms, and you would have to go back a long, long way to find a stronger monthly result than that. </span></div>
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<div><a href="/images/2016/02/15/A6.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/02/15/A6.jpg" alt=""></span></div>
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<div><span>Major renovation activity has been marginally improved in recent months from 2014 levels, but in reality this has been almost exclusively a Sydney trend through this cycle to date. </span></div>
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<div><a href="/images/2016/02/15/A3.jpg" target="_blank"><span>Click to enlarge</span></a></div>
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<strong><span style="text-decoration: underline;">First time buyers are active</span></strong><br><br><div>The latest figures showed an increase in first homebuyer owner-occupier activity of +4.6 percent to 15.1 percent of all loans written. </div>
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<div><span><span>If you include first time buyer investors from industry surveys, the total figure for first time buyers is tracking around 50 per cent higher than this.</span><br><br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><br><span>Overall, it is clear that there has been a behavioural shift between lenders and borrowers towards favouring owner-occupier mortgages over investment loans, the lines between which have become hopelessly blurred.</span><br><br><span>The headline figures show that in aggregate housing finance remained relentlessly strong through 2015, even if some mining regions are feeling the burn.</span><br><br><span>According to CoreLogic-RP Data Sydney posted Very solid preliminary auction clearance rate of 78.6 per cent from 469 auctions, well ahead of the preliminary clearance rate for Melbourne at 72.6 per cent.</span><br><br><span>Vendors seem a bit more realistic, and these are still relatively low volumes. Most signs point to a steady Sydney market in 2016.</span><br><br><span>Westpac's forecasts for economic growth from 2015 to 2017:</span></span></div>
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<div><a href="/images/2016/02/15/GROWTH.jpg" target="_blank"><span><span>Click to enlarge</span></span></a></div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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pwargent-M4siyDbqQY

Housing market in good health: Pete Wargent

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<p class="post-title entry-title">EXPERT OBSERVER</p>
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<div><span style="text-decoration: underline;">Investors squashed</span></div>
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<div>APRA's latest monthly banking statistics reported negative growth in investment loan exposures in July.</div>
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<div>Commonwealth Bank, ANZ Bank, Westpac Banking Corp, and Suncorp all recorded an outright decline in outstanding housing investment loans, while NAB's investment loan book was broadly flat. </div>
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<div>Year-on-year growth is either negative or slowing for each of the major banks. </div>
<br><div class="separator"><a href="https://2.bp.blogspot.com/-LUd2DkjnNyQ/W4jYw_YUa9I/AAAAAAAAruk/0kMJO3Rn0woMwmcQ8naGWIk90CKq_tM7QCLcBGAs/s1600/APRA1.jpg"><img src="https://2.bp.blogspot.com/-LUd2DkjnNyQ/W4jYw_YUa9I/AAAAAAAAruk/0kMJO3Rn0woMwmcQ8naGWIk90CKq_tM7QCLcBGAs/s640/APRA1.jpg" width="640" height="370" data-original-height="800" data-original-width="1380"></a></div>
<br><div>The Reserve Bank of Australia (RBA) also reported that year-on-year investor credit growth hit its lowest level on record in July 2018.</div>
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<div>With annual personal credit growth contracting even further to -1.4 per cent and business credit growth slower than a year earlier at just 3.4 per cent, the growth in total credit is now at the lowest level since the first quarter of 2014.</div>
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<div>Lending to homebuyers remains solid, but broad money growth is tracking at quarter-century lows. </div>
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<div class="separator"><a href="https://2.bp.blogspot.com/-62-d91RX9QY/W4jSs7OqIUI/AAAAAAAAruQ/ecqCCrMsQwQtihDoGVNzZSsggQbVyaE6gCEwYBhgL/s1600/RBA2.jpg"><img src="https://2.bp.blogspot.com/-62-d91RX9QY/W4jSs7OqIUI/AAAAAAAAruQ/ecqCCrMsQwQtihDoGVNzZSsggQbVyaE6gCEwYBhgL/s640/RBA2.jpg" width="640" height="370" data-original-height="803" data-original-width="1382"></a></div>
<br><div>The housing investor market share fell further to 33.2 per cent, now having fallen back in line with the average level for this millennium to date (there have evidently been a few misclassifications along the way). </div>
<br><div class="separator"><a href="https://2.bp.blogspot.com/-WIlXPESvdWQ/W4jStMOt7AI/AAAAAAAAruU/hxDMv58ahysDC9EQi6kVEszUsmxP4QrGgCLcBGAs/s1600/RBA1.jpg"><img src="https://2.bp.blogspot.com/-WIlXPESvdWQ/W4jStMOt7AI/AAAAAAAAruU/hxDMv58ahysDC9EQi6kVEszUsmxP4QrGgCLcBGAs/s640/RBA1.jpg" width="640" height="352" data-original-height="801" data-original-width="1454"></a></div>
<br><div><span style="text-decoration: underline;">Equal &amp; opposite reaction</span></div>
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<div>Housing markets can be a finely balanced affair, with the strong level of rental supply of recent years now set to reverse.</div>
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<div>Given that we've been through a period of strong immigration/population growth alongside falling home ownership rates, from a macro perspective presumably this must be leading to rental shortages in some parts of the country (not so much in the big capital cities yet, due to the high level of off the plan apartment purchases through this cycle and the related lag effect). </div>
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<div>I don't have much time to look at it today, but a quick glance at the stats shows rental vacancy rates plunging towards zero in Orange, from certain parts of Adelaide to Ballarat and Canberra, and from Geelong West to Hobart and Moranbah.<br><br>If the investor squeeze persists Melbourne may be next of the largest metropolises. </div>
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<div>Still plenty of apartment supply to be absorbed in the big cities, but this will be one trend to watch with interest.</div>
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<br><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em>
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