Owner Occupiers

<p>Investor lending went up in May, according to the latest monthly data from the Australian Prudential Regulation Authority, but the growth rate was down on the prior wo months.</p>

<p>Strong growth in owner-occupied lending continued with a jump of 0.9 per cent.</p>

<p>Investor lending increased by 0.1 per cent (or $900 million) in May, down on April&#39;s growth rate of 0.3 per cent ($2.1 billion) and March, when it increased by 0.2 per cent ($1.6 billion).</p>

<p><img alt="" height="519" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rba_housing_charts.jpg" width="1200" /></p>

<p>Westpac had the largest rise in the owner-occupied portfolio to $236.9 billion in May but its investor loan portfolio dipped to $177 billion.</p>

<p>The CBA was the next biggest lender to investors with a $161 billion loan book, the the NAB at $100 billion and ANZ at $87 billion. The largest lender outside the big four was Macquarie at $27 billion and Bendigo &amp; Adelaide Band at $15 billion.</p>

<p>[smartcode_project:default project_id=3459 project_image_fid=147572]</p>

<p>APRA said &quot;the recent sustained growth in home lending continues to reflect robust borrower demand&quot; underpinned by record-low interest rates, government measures supporting first home buyers (such as the First Home Loan Deposit Scheme), and new home building, as well as an optimistic employment outlook.</p>


APRA figures for May show a slowing in investor borrowing

jchancellor

May sees reduced growth in property investor lending: APRA

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<p>While home value rises have been moderate over recent years outside of Sydney and Melbourne, it provides little comfort for first home buyers in the two largest cities who struggle to compete with those that already own homes.</p>
<div>
<p>In 2008, combined capital city home values fell by -6.1 percent in the space of 9 months. By the end of the year, home values had reached and began to climb thereafter.</p>
<p>The drivers of this growth was largely two forms of stimulus: aggressive interest rate cuts and a boost to the First Home Owners Grant (FHOG). Since the boost to the FHOG was removed and many of the existing grants were removed or scaled back, first home buyers have continued to languish at near record low levels. The harsh reality is that first home buyers are struggling to compete with those who already own a home or who are investing.</p>
<p>The first chart highlights the increase in home values across each capital city from December 2008 to April 2016. Another way to think about this is that if in December 2008 you owned a home worth $500,000 it is now worth $758,418 which is $258,418 more than in December 2008. Looking at this same calculation across each capital city, the increases in value over that time based on a $500,000 home owned in December 2008 are: Sydney ($400,825), Melbourne ($338,866), Brisbane ($73,417), Adelaide ($81,029), Perth ($64,096), Hobart ($11,263), Darwin ($109,293) and Canberra ($126,262).</p>
<h3>Cumulative change in home values<br>December 2008 to April 2016</h3>
<p><a href="/images/2016/05/30/2016-05-30---img1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/30/2016-05-30---img1.jpg" alt=""></p>
<p>While the value of a home owner’s property has undergone massive rises, the increase in inflation and wages has been comparatively more sedate.</p>
<h3>Cumulative change in CPI (inflation) <br>December 2008 to March 2016</h3>
<p><a href="/images/2016/05/30/2016-05-30---img2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/30/2016-05-30---img2.jpg" alt=""></p>
<p>Although combined capital city home values have increased by 51.7 percent between December 2008 and April 2016, inflation has increased by a significantly lower 17.1 percent over the period. CPI has increased by a greater amount than values in Brisbane, Adelaide, Perth and Hobart indicating ‘real’ home values have fallen. Meanwhile in Sydney, Melbourne, Darwin and Canberra CPI growth has lagged that of home value growth.</p>
<p>Looking at wages growth between December 2008 and March 2016, it shows that nationally and in New South Wales, Victoria and the ACT it has lagged value growth across the capital cities. It should be noted that wages are now growing at the slowest pace in at least 18 years and that the increases highlighted do include strong wage increases in the latter part of the mining boom. Nonetheless, the data highlights that in NSW and Vic wages are increasing at a much slower pace than home values in Sydney and Melbourne are.</p>
<h3>Cumulative change in Wage Price Index<br>December 2008 to March 2016</h3>
<p><a href="/images/2016/05/30/2016-05-30---img3.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/30/2016-05-30---img3.jpg" alt=""></p>
<p>The final chart shows the change in the value of new lending (excluding refinances) to investors, owner occupier first home buyers and subsequent buyers between December 2008 and March 2016. The chart highlights how the value of lending to owner occupier first home buyers is now lower than it was in December 2008 across each state and territory. This has occurred despite the increase in home values over the timeframe. While lending to owner occupier first home buyers has fallen, lending to investors and subsequent buyers has increased in most states and territories with substantial rises in NSW and Vic.</p>
<h3>Change in the value of new lending to investors, FHB and subsequent buyers<br>December 2008 vs. March 2016</h3>
<p><a href="/images/2016/05/30/2016-05-30---img4.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/05/30/2016-05-30---img4.jpg" alt=""></p>
<p>While outside of Sydney and Melbourne home values have increased below or at a similar pace to inflation and wages, it is a very different story in the two largest capital cities. Existing owners of homes in Sydney and Melbourne have seen a significant increase in the ‘real’ value of their home. Subsequently those that do not yet own struggle to compete with investors and upgraders that have been so active in the market and already have significant equity.</p>
<p>The simple answer to this problem is that first home buyers in Sydney and Melbourne should look to buy properties outside of these cities however, that may be a little simplistic. Job creation has not been as strong outside of Sydney and Melbourne and for many moving interstate, employment opportunities are generally a big decision. Even buying outside of Sydney in nearby regional cities may not be attractive because transport infrastructure does not provide quick and efficient access to Sydney and Melbourne from nearby regional cities.</p>
<p>We certainly don’t advocate for the return of grants for first home buyers as they have tended to just push up the cost of housing. Prospective first home buyers are facing some tough choices as they compete with other segments of the market who may have larger budgets or a great deal of equity behind them thanks to a history of strong capital gains. Remaining (or joining) the rental market is one option that many may choose, considering weekly rents are down 0.2 percent across the combined capitals.</p>
<p>Those choosing to rent may decide to make their first home purchase an investment property in a location that is more affordable and better suits their budget. For those first home buyers looking to buy their first home to live in, their options will often be limited to the city outskirts if they are to purchase a detached dwelling, or compromising on space to live closer to where they work and play by choosing a higher density option.</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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Investors, owner occupiers making things tough for first home buyers: CoreLogic RP Data's Cameron Kusher

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<p><span>On the last day of the month the Reserve Bank released its </span>Financial Aggregates <span>data for the month of August 2015, which showed another solid month for both housing credit growth (+0.6%) and business credit growth (+0.5%).</span></p>
<p><a href="/images/2015/10/01/RBA1.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/01/RBA1.jpg" alt=""></span></p>
<p> </p>
<div>Over the year housing (+7.5 per cent) and business (+5.3 per cent) credit has helped to take total private sector credit growth to its highest level since 2008 at +6.3 per cent.</div>
<p><strong><span style="text-decoration: underline;">Business credit grows</span></strong></p>
<div>Total business credit outstanding ticked up to above $800 billion, having recovered steadily since the financial crisis.</div>
<div> </div>
<div><a href="/images/2015/10/01/RBA2.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/10/01/RBA2.jpg" alt=""></div>
<div> </div>
<div><span>Annual credit growth for the business sector increased at its strongest annual pace since February 2009, with Westpac forecasting further moderate gains in the months ahead.</span></div>
<div><span> </span></div>
<div><a href="/images/2015/10/01/RBA3.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2015/10/01/RBA3.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<strong><span style="text-decoration: underline;">Investor loans slowed</span></strong><br><br><div>There has evidently been a little innocent jiggery-pokery by Australia's major lenders when it comes to the splitting of investor and owner-occupier credit.</div>
<br><div>As you can see in the chart below, last month it transpired that tens of billions of dollars of credit had been misreported as owner-occupier credit, when in fact in related to investment housing.<br><br>The direction of the misstatement can hardly come as a shock.</div>
<div> </div>
<div>As a result the share of outstanding credit for investment housing is materially higher than previously had been thought (or at least, reported - I expect few market participants would be surprised).</div>
<div> </div>
<div>That said, the slow drip of measures taken to douse investor credit first became a trickle and now it is a flow, and it appears that APRA's intervention has now taken the sting right out of the investment lending sector, with some lenders having put the kibosh on new investment loans altogether.<br><br>You can see the impact of the restatement and then APRA's macroprudential measures in the red line below, with the total stock of outstanding credit not rising on a seasonally adjusted basis this month for the first time since 2011.</div>
<div> </div>
<div><a href="/images/2015/10/01/RBA4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/10/01/RBA4.jpg" alt=""></div>
<div> </div>
<div>
<div>Overall this is a healthy move for the market, which was at risk of becoming too "top heavy" with investors.<br><br>Although there is no oversupply of dwellings in aggregate, there clearly were too many investors piling into the market which had helped to slow rental growth to a 20 year low.<br><br><strong><span style="text-decoration: underline;">The return of owner-occupiers</span></strong>
</div>
<div> </div>
<div>However, it is too simplistic to say that the slowdown in investor lending will automatically put dwelling price growth into reverse gear.</div>
<div> </div>
<div>If there is one thing we know about banks in this country it is that they will look to lend against housing where possible, and as such we can expect lenders to push owner-occupier loans ever harder, using enticing mortgage rates of around 4 per cent to in order to expand home loan books.<br><br>The Reserve Bank Governor himself has predicted that more folk will opt to place themselves as "owner-occupiers" in due course. </div>
<br><div>Indeed, while investor credit is now almost certain to fall below APRA's advisory +10 per cent growth threshold over the next few months, owner-occupier credit has already been picking up the slack in rising by rising by +0.6 per cent in August.</div>
<div> </div>
<div>There has been a clear pick-up in the pace of owner-occupier credit growth over the past three months, and annualised home lending growth to owner-occupiers has increased to 43 month high at +5.6 per cent.</div>
<div>
<br>In turn this has helped total home lending credit growth rise to +7.5 per cent, which is now a 59 month high.</div>
<p><a href="/images/2015/10/01/RBA5.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/10/01/RBA5.jpg" alt=""></p>
<div><strong><span style="text-decoration: underline;">Investor share of credit falls</span></strong></div>
<div> </div>
<div>The restatement of the categorisation of investor loans saw the total share of investor credit blow out to an unprecedented 38.6 per cent last month.</div>
<div>However, with APRA's cooling measures now taking effect the investor share ticked downwards in August for the first time in 30 months, more evidence that the regulatory intervention will have a material impact on the investor sector.</div>
<p><a href="/images/2015/10/01/RBA6.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/10/01/RBA6.jpg" alt=""></p>
<p><strong><span style="text-decoration: underline;">The wrap</span></strong></p>
<div> </div>
<div>Overall it was another month of strengthening housing credit, with owner-occupiers increasingly willing to take advantage of record low borrowing rates. </div>
<div> </div>
<div>Investor credit growth looks set to fall back to an annual growth rate of below 10 per cent, but in total housing credit is still picking up its pace to multi-year highs.</div>
<div> </div>
<div>---</div>
<div> </div>
<div>August was a quieter month for initial capital raised on the Australian Securities Exchange, although there was a strong volume of secondary cap raisings.<br><br>Total capital raised on a rolling annual basis has increased to its highest level since the great flood of recapitalisation over the year to May 2010.</div>
<div> </div>
<div><a href="/images/2015/10/01/ASX-1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/10/01/ASX-1.jpg" alt=""></div>
<div> </div>
<div>
<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

Owner-occupiers pick up housing market baton: Pete Wargent

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<p>The Reserve Bank of Australia released its Financial Aggregates data for January 2016, which showed credit growth of +6.5 percent in the year to January 2016, a steady increase on the +6.1 percent recorded for the year to January 2015.</p>
<p><a href="/images/2016/03/RBA2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/03/RBA2.jpg" alt=""></p>
<div>Total annual housing credit growth has slowed a bit from its recent peak of +7.47 per cent in November 2015 to +7.33 per cent in January 2016, reflecting in part the shift in composition of lending from investors to owner-occupiers. </div>
<div> </div>
<div>Investor credit growth is now well below APRA's arbitrary +10 per cent threshold at just +7.9 per cent and consistently slowing from +11 per cent in June, meaning that theoretically major banks could in due course start to ramp up lending into this sector should they feel the urge to do so. </div>
<div> </div>
<div>Of course, any such move would be dependent upon a range of regulatory factors, and whether APRA has the appetite to loosen its throttle.<br><br>Meanwhile owner-occupier annual credit growth recorded another significant jump in surging to a 64 month high of +6.95 per cent, with homebuyers looking to take advantage of attractive mortgage rates.</div>
<div> </div>
<div><a href="/images/2016/03/RBA1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/03/RBA1.jpg" alt=""></div>
<div> </div>
<div><span>Deposit growth seems to present few headaches for banks right now. While term deposits have been understandably less popular in the prevailing low interest rate environment, total deposits with banks have expanded in a robust manner over the year to January. </span></div>
<div><span> </span></div>
<div><a href="/images/2016/03/RBA3.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/03/RBA3.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<div><strong><span style="text-decoration: underline;">Business credit</span></strong></div>
<div> </div>
<div>Business credit grew by +6.2 per cent in the year to January 2016, up from +5.5 per cent in the year to January 2015. It is as yet unclear whether this is the end of the uptrend for business lending growth, or a blip in the upwards trajectory. </div>
<div> </div>
<div><a href="/images/2016/03/RBA4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/03/RBA4.jpg" alt=""></div>
<div> </div>
<div>
<strong><span style="text-decoration: underline;">Housing credit</span></strong><br><br><span>The chart below shows how lenders in the housing market have conveniently managed to shift almost seamlessly away from investment lending to owner-occupier credit, with a bit of reclassification jiggery-pokery along the way.</span><br><br><span>In fact, the data submitted by lenders makes it look as though the chart has been drawn up on an Etch-A-Sketch.</span>
</div>
<div><span> </span></div>
<div><a href="/images/2016/03/RBA5.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/03/RBA5.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<div>Total housing credit continued to push beyond $1.53 trillion, growing at an annual pace of +7.33 per cent, although naturally there are marked differences between the states and capital cities, with some faring much better than others.<br><br>There have been a few pro-equities articles today discussing "plummeting" lending and investors "leaving the market in droves".<br><br>That's interesting, but it's not what I'm seeing. Don't forget that housing credit expanding at a pace of +7 per cent implies a doubling in outstanding credit over a decade.<br><br>It's all in the marketing, I guess.</div>
<div> </div>
<div><a href="/images/2016/03/RBA6.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/03/RBA6.jpg" alt=""></div>
<div> </div>
<div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>Credit growth was fairly steady in January, with owner-occupiers continuing to pick up the baton from investors within the housing sector.</div>
<div> </div>
<div>A key question going forward will be whether having managed to push investor credit growth below its preferred +10 per cent threshold APRA releases its grip on investor lending at all. </div>
<div> </div>
<div>As APRA's data last week showed, the overwhelming majority of property buyers these days have substantial deposits, the question is whether tougher criteria are to be maintained surrounding mortgage serviceability. </div>
<div> </div>
<div>Another key factor could be movements in the cash rate, with interest rate cuts potentially set to stimulate demand for mortgage borrowing further, although it appears likely that lenders would hold back 10bps to15bps of a prospective 25bps interest rate cut.</div>
<div> </div>
<div>Adding to the parts of GDP we already know such as net exports, the Business Indicators released by the ABS this morning including inventories (-0.4), wages (+0.5), and company profits (-2.8), each suggested that headline GDP growth for the fourth quarter of 2015 is likely to be weak. </div>
<div> </div>
<div>These GDP partials may prove to be another tack in the coffin for the next movement in interest rates being down. </div>
<div> </div>
<div>
<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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Owner-occupiers lead housing lending: Pete Wargent

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<p><span>The Australian Bureau of Statistics (ABS) released housing finance data for July 2015 earlier this week.</span></p>
<p><span>Throughout July, there was $32.8 billion worth of housing finance commitments. This figure was comprised of $19.2 billion worth of commitments to owner occupiers and $13.6 billion in commitments to investors. Over the month, the total value of housing finance commitments increased by 1.5% to be 15.0% higher year-on-year.</span></p>
<p><a href="/images/2015/09/10/Chart-11.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/10/Chart-11.jpg" alt=""> </span></p>
<p><span><span>At $19.2 billion, owner occupier housing finance commitments increased by 2.2% over the month and were 13.9% higher year-on-year. Breaking the $19.2 billion into its components: $1.6 billion was for construction of dwellings, $1.1 billion was for the purchase of new dwellings, $6.2 billion was for refinances of established dwellings and $10.2 billion was for the purchase of established dwellings. Over the month, commitments for the construction of dwellings fell -1.5%, purchase of new dwellings rose 8.4%, refinances rose 3.3% and purchase of established dwellings rose 1.5%.  </span></span></p>
<p><span><span>Over the past 12 months the refinance segment has been the key driver of growth in the owner occupier lending segment with commitments up 23.7%. In comparison, year-on-year changes have been recorded at -7.6% for construction of dwellings, 15.4% for purchase of new dwellings and 12.6% for purchase of established dwellings. Recently growth in the owner occupier lending segment has been lacklustre, driven largely by refinances however, the 13.9% year-on-year rise in owner occupier housing finance commitments excluding refinances is the largest rise since February 2014.</span></span></p>
<p> </p>
<p><a href="/images/2015/09/10/Chart-21.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/09/10/Chart-21.jpg" alt=""></p>
<p>Turning to the investment segment of housing finance commitments, this has over recent years been a significant driver of new demand. In July 2015, investor housing finance commitments rose by 0.5% to be 16.5% higher year-on-year. If we look at the $13.6 billion in investment housing commitments across its components, $1.1 billion was for construction of new investment dwellings and $12.5 billion was for established homes. </p>
<p>Over the month, commitments for new construction rose 11.7% compared to a -0.4% fall in commitments for established homes. Year-on-year investor commitments for construction of new dwellings has increased by 81.5% compared to a 12.9% rise in the much larger segment for purchase of established investment homes.  The chart above shows the recent weakness in commitments for established homes and the ongoing rise in commitments for new construction.</p>
<p>It seems that there is a growing appetite for investment in off-the plan investment properties while demand for established investment stock is waning a little.  Despite the monthly rise in demand for investment lending, the rate of growth has started to ease as Australian authorised deposit-taking institutions (ADIs) tweak their lending policies in line with policy updates from APRA aimed at slowing growth in the pace of total investor housing credit.</p>
<p>Housing credit data for July 2015 showed that growth in owner occupier credit is ramping up while investor credit demand is potentially slowing. This release of housing finance data appears to support that notion. The ADIs will be hoping that they can entice additional activity from the owner occupier segment over the coming months as there is likely to be a slowdown in lending to the investment segment.</p>
<p>Housing finance data is continuing to rise however, it appears that growth is starting to tilt away from investors towards the owner occupier segment. Although regulators such as the Reserve Bank and APRA will be glad to see that exuberance from investment borrowers may be slowing, they will be very keen to monitor and ensure that any pick-up from owner occupier borrowers is not as a result of a relaxing of lending standards.</p>
<p>Both the housing credit and housing finance data will be closely monitored over the coming months in order to see if this transition continues. Specifically we will be watching whether housing credit can continue to increase its rate of growth and if new commitments continue to tilt away from investors towards owner occupiers and what impact that may have on housing finance demand.</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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Housing finance commitments rise in July: Cameron Kusher

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<p>EXPERT OBSERVATION</p>
<p><span>There was more good news for the housing market today with the release of figures showing that the value of owner occupier home loans has reached its highest since July of last year.</span></p>
<p><span>The latest figures indicate that the seasonally-adjusted value of lending to owner occupiers reached $14.24 billion during September, an expansion of 3.2% compared with the previous month and up by 5.6% compared with a year ago. The value of new home lending was up by 0.8% during the month.</span></p>
<p><span>The news around the housing market has been largely positive over the past six months and the new figures out today add to the unfolding good news story.</span></p>
<p><span>Confidence has been in short supply across the economy over recent times with the subdued state of domestic demand reflecting this.<br></span></p>
<p><span>The state of the housing market has a huge impact on people’s willingness to spend and invest. The continued improvement in the housing market will assist in this respect.</span><span> </span></p>
<p><span>We still need more from all levels of government so that demand in the economy can be bolstered.</span><span> </span></p>
<p><span>Earlier today, the Reserve Bank trimmed its short-term growth forecasts for the Australian economy.</span></p>
<p><span>Part of the problem is that new infrastructure projects are not hitting the ground quickly enough. This is causing economic recovery to be delayed unnecessarily.</span></p>
<p><span>During September, Tasmania saw the largest increase in the number of owner occupier home loans (+10.3%), followed by Western Australia (+5.6%) and the Northern Territory (+3.6%). There were also increases in Queensland (+3.5%), New South Wales (+1.8%), Victoria (+1.8%) and South Australia (+1.0%). The ACT was the only market to see the number of owner occupier loans drop during September (-1.8%).</span></p>
<p><span>In addition CommSec's Craig Jame said, in reference to the latest ABS data,</span> "investment loans fell by 4.0 per cent in September after a 6.5 per cent lift in August."</p>
<p>"The average home loan size in NSW for owner-occupier established homes excluding refinancing rose to a record high of $520,900 in September. The annual growth rate of 7.4 per cent is the strongest in 19 months."</p>
<p>"In seasonally adjusted terms, the share of first-home buyers in the home lending market fell from 7½-year highs of 29.5 per cent in August to 28.0 per cent in September."</p>
<p>"The value of loans to businesses rose by 19.1 per cent in September. Within business loans, the value of commercial lending rose by 19.5 per cent – the biggest increase in over 2 years," he concluded.</p>
<p><em><strong>SHANE GARRETT</strong> is the Chief Economist of Master Builders Australia</em></p>
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Owner occupier home lending hit a 14-month high: Shane Garrett

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<p>Data shows that investors continue to be more likely to resell their properties at a loss compared to owner occupiers, according to the latest data from CoreLogics Pain &amp; Gain report for the June quarter.</p>
<p>They found that over the second quarter of 2019, 11.3% of properties that were owned by owner occupiers resold at a loss compared to 17.4% of investment properties.</p>
<p>Across each of the major regions, except for regional Victoria and regional Tasmania, a greater share of investors resold their properties at a loss than owner occupiers.</p>
<p>Throughout the combined capital cities, 11.5% of owner occupier properties that were resold over the second quarter of 2019 resold for a loss compared to 18.1% of investor owned properties.</p>
<p><em>Click to <a href="https://www.propertyobserver.com.au/images/2019/10/29/Resales%20OO%20vs%20I.JPG" target="_blank">open in new window</a>:</em></p>
<p><img src="https://www.urban.com.au/images/2019/10/29/Resales%20OO%20vs%20I.JPG"></p>
<p>In Melbourne (5.0% vs 13.5%), Brisbane (8.3% vs 24.3%) and Canberra (4.6% vs 21.0%) investors were more than twice as likely to resell a property at a loss than owner occupiers during the quarter.</p>
<p>In most of the remaining capital cities, the differential in share of loss-making resales between owner occupiers and investors was fairly small.</p>
<p>Across the regional areas of the country, investors were more likely to resell a property for a loss (15.8%) than owner occupiers (11.1%).</p>
<p>The gap between owner occupied and investor owned properties reselling at a loss was generally quite small.</p>
<p>"Clearly, any property owner will aim to make a profit from the sale of their property," the report said.</p>
<p>"In a falling market owner occupiers may be more prepared to sell at a loss if they are purchasing their next home at an equivalent or greater discount.</p>
<p>"Conversely, investors, because of taxation rules, would seemingly be more prepared to incur a loss because they (unlike owner occupiers) can offset those loses against future capital gains.</p>
<p>"If home values fall, investors may be more inclined to sell at a loss and offset those losses which in turn could result in more supply becoming available for purchase at a time in which demand for housing remains below average due to recent weak conditions and tighter credit availability however, these trends have started to reverse over recent months."</p>
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Investors more likely than owner occupiers to resell property at a loss: CoreLogic Pain & Gain Report

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<p>Governments have seeded many key infrastructure projects throughout Australia, and the growing list of transport projects is painting a positive picture for the nation’s ability to absorb population growth, according to Urbis' latest report.</p>
<p>Across the national apartment market, Urbis found that 7% of available stock surveyed sold in the first quarter of 2019, continuing the downward trend from 2018.</p>
<p>Urbis Group Director, Clinton Ostwald, said “It is likely that we will see the floor of the sales valley in 2019 with a potential increase in sales activity in 2020.</p>
<p>“The nation is investing heavily in transport infrastructure to improve amenity in our cities, which will help support demand along corridors such as Sydney’s North West Metro and Eastern Suburbs Light Rail.”</p>
<p>While buyers await delivery of new infrastructure, Sydney recorded the lowest sales rate with only 4% of available stock surveyed selling during the quarter. Melbourne and Brisbane both recorded a sales rate of 7% down on rates seen in the past 12 months. The Gold Coast outperformed the major cities recording 230 sales, equating to 9% of available stock.</p>
<p><strong>Stock</strong></p>
<p>Urbis research shows approvals numbers decreasing each quarter over the past 12 months. The number of developments achieving minimum presale levels has also declined, resulting in a large pipeline of approved projects they feel are unlikely to move to construction in the near future.</p>
<p>They believe that given ongoing population growth from natural increase and migration, we are likely to see a shortage of new housing emerge over the next 12 to 18 months.</p>
<p>Melbourne’s Westgate Tunnel will uplift the Inner West and Western Corridor with approximately 7,500 apartments approved in these precincts.</p>
<p>Brisbane’s Cross River Rail in the Inner South will see a similar pattern where there are over 8,000 approved apartments.</p>
<p>In the longer term, Urbis expect that areas around West Metro in Sydney, Metronet in Perth and Metro Rail Tunnel in Melbourne will see increased apartment activity.</p>
<p><strong>Buyer Profile</strong></p>
<p>Owner occupiers have continued to be the most active buyers in the Australian apartment market, accounting for 51% of buyers in Q1 2019.</p>
<p>Foreign investors have been pushing sales in Sydney, Perth and the Gold Coast, accounting for over a quarter of buyers, but have dropped in Brisbane.</p>
<p>Interstate investors were interested in the Gold Coast (25%) and Melbourne (11%) whereas Sydney, Brisbane and Perth appealed more to local investors.</p>
<p>URBIS CITY SNAPSHOT</p>
<p>6.7 % of the surveyed available stock was sold in the January quarter across the five markets:</p>
<ul>
<li>Sydney (4% of available surveyed stock sold, 485 new apartments launched)</li>
<li>Melbourne (7% of available surveyed stock sold, 295 new apartments launched)</li>
<li>Brisbane (8% of available surveyed stock sold, no new apartments launched)</li>
<li>Perth (6% of available surveyed stock sold, 161 new apartments launched)</li>
<li>Gold Coast (9% of available surveyed stock sold, 164 new apartments launched)</li>
</ul>
<p>National weighted average sale price recorded at $726,329 for Q1 2019</p>
<ul>
<li>Sydney – $1,091,935</li>
<li>Melbourne – $621,246</li>
<li>Brisbane – $638,409</li>
<li>Perth – $604,212</li>
<li>Gold Coast – $787,608</li>
</ul>
<p>The most popular product type was two-bedroom, two-bathroom product at 46% of total sales. Across the cities the highest selling product types were:</p>
<ul>
<li>Sydney – Two-bedroom, two-bathroom apartments – 41%</li>
<li>Melbourne – One-bedroom, one-bathroom apartments – 50%</li>
<li>Brisbane – Two-bedroom, two-bathroom - 56%</li>
<li>Perth – Two-bedroom, two-bathroom – 43%</li>
<li>Gold Coast – Two-bedroom, two-bathroom – 63%</li>
</ul>
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Owner occupiers accounted for 51% of apartment purchases lastest quarter

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<p>EXPERT OBSERVATION</p>
<p>Home loan demand fell in September, according to new data from the Australian Bureau of Statistics (ABS), revealing some of the weakest demand in home lending in Australia in over four years.</p>
<p>The latest Housing Finance data from the ABS reveals that, in seasonally adjusted terms, 50,673, home loans were approved throughout September - down 1.0% from the month prior.</p>
<p>The data reveals that $29.1 billion worth of dwelling commitments were made over September, a reduction of 3.8% from the month prior, in seasonally adjusted terms. This included a 4.2% reduction in the value of owner-occupied housing commitments to $19.3 billion and a 2.8% reduction in the value of investment loans to $9.7 billion.</p>
<p>In September we saw a decline in the number and value of home loans approved. In fact, September revealed the lowest monthly value of dwelling commitments since August 2014. Interestingly, this decline had been driven by investors in recent times but we are seeing a drop in owner-occupier demand as well. </p>
<p>Investor activity in the market had slowed considerably following APRA’s cap on investor loan growth. Looking ahead, there is speculation that investor borrowing could fall further if the Labor party’s proposed changes to negative gearing are put in place. As a tax concession, negative gearing assists investors enter the real estate investment market by reducing the cost of purchasing and servicing investment properties.</p>
<p>Indeed, Mortgage Choice data shows investor borrowing has slowed however, there is potential for a short-term impetus from investors as we near the upcoming Federal election from investors who wish to secure the grandfathered tax concession.</p>
<p>The significant drop in the value of owner occupier loans – 8% over two months, is likely being fuelled by a combination of factors such as tighter lending conditions and the reduction of activity in the Sydney and Melbourne housing markets which have the highest median dwelling values and consequently higher average loan sizes in the nation.</p>
<p>CoreLogic’s Hedonic Home Value Index reported a 2.7% annual fall in national dwelling values in September, fuelled by a 6.1% drop in Sydney and a 3.4% drop in Melbourne over the year.</p>
<p>Softening house prices across the country should continue to support home loan demand from first home buyers across the country who may be able to take advantage of stamp duty concessions and first home owner grants. I expect these buyers to support owner occupied housing commitments over the medium-term.</p>
<p>That being said, in an environment of tightened lending where Australian lenders are on a mission to scrutinise home loan applications, it has never been more important for first time borrowers and existing borrowers alike to seek expert advice when applying for housing credit.</p>
<p>A qualified mortgage broker can assist prospective home buyers and those looking to refinance into a new home loan by comparing the mortgage products of a variety of lenders to find a loan that is suited that borrower’s unique financial situation.</p>
<p>The average Australian may not be aware that lenders are more demanding than ever and each lender has their own unique set of policies and preferences. The value of engaging a mortgage broker is that they are home loan experts who have an intimate knowledge of what lenders are looking for and are therefore able to secure borrowers a competitive home loan deal.</p>
<p><em><span>SUSAN MITCHELL</span> is the CEO of Mortgage Choice (pictured above).</em></p>
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Owner-occupiers lead the charge in declining home loan demand: Susan Mitchell

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<p>ANZ said it has been increasing its owner-occupied home loans business much faster than the market while posting a cash profit increase of 5.3 percent to $1.79 billion for its third quarter ended June 30.  </p>
<p>In its third quarterly trading update, the bank said its lending growth in the owner occupied segment was 30 percent above the system average.</p>
<p>“We’ve said for some time as a strategy we want to be the best bank for people that want to buy and own a home and so we’ve been growing our business in owner occupied home loans much faster than the market,” ANZ CEO Shayne Elliott told the bank’s in-house news publication BlueNotes.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/08/18/ANZmain.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/08/18/ANZmain.png" alt=""></p>
<p>He said the bank was re-weighting its portfolio towards that segment and “we’re really comfortable with that”. </p>
<p>“The way we’re doing that is just really is focus and great product and distribution through our branch network,” added Elliot. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/08/18/ANZSummary.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/08/18/ANZSummary.png" alt=""></p>
<p>ANZ said it was also on course to meeting macro prudential requirements for mortgage growth.</p>
<p>Investment lending was at 80% of the combined industry average.</p>
<p>Its research arm recently said that the <a href="https://www.urban.com.au/news/73812-ytc-august-1-sentence-2-housing-investor-credit-continues-to-ease" target="_blank">slowdown in investor borrowing</a> was continuing, and quarterly annualised growth sits at 6%.</p>
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