Investor lending stifled by stricter APRA restrictions

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The value of housing loans to investors sank in seven of the eight states and territories over the year to August 2018, according to the recent report from Australian Bureau of Statistics (ABS).

The largest decline in loans to investors was observed in the Northern Territory, down by 21.6%.  This was followed by Queensland (-18.9%), New South Wales (-14.9%) and Western Australia (-14.2%). There were also drops recorded in South Australia (-10.4%), Victoria (-6.0%) and the Australian Capital Territory (-5.8%).

Master Builders Australia associated these slowdowns with increased restrictions imposed by the Australian Prudential Regulation Authority, as well as with weakening market condition.

The industry group also noted the significance of investor engagement with the market in cities such as Sydney and Melbourne. Why? Investments play a big role in providing housing needs of growing workforces locally, and in allowing these economies to continuously develop.

Tasmania was the only market to see a hike in lending to housing investors, with figures climbing 8.2% compared with the previous year, and Master Builders Australia Chief Economist Shane Garrett said that the credit for the recorded gain goes to its capital city.

“The increase in investor involvement in Tasmania’s housing market over the past year is welcome. Hobart is now the fastest growing city for rental prices and has the lowest rental vacancy rate in the country. The increase in investor activity means that more dwellings are coming onto the rental market – exactly what’s needed,” he shared.

These results build on the state’s increasingly positive track record over recent months. Tasmania generated strong take-ups in areas of new detached home growth and an emerging first homebuyers market, as well as outperforming other states and territories when it comes to the home building industry.

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