The latest ABS housing figures show new lending has dropped to the lowest levels since August 2014 and lending to housing investors is at the lowest it’s been since 2013.
The seasonally adjusted figures from September show an overall drop in lending of 3.8 per cent from the previous month. Owner-occupiers fell the most, down 4.2 per cent from last month, which puts them at the lowest levels since July 2015.
This is alongside investor loans which fell 2.8 per cent from the previous month, putting them at the lowest level since July 2013.
“During September 2018, a total of $9.75 billion worth of loans was provided to Australian housing investors. This was 2.8 per cent lower than the month before,” said Master Builders Australia’s Chief Economist Shane Garrett.
“The ABS results mean that housing investor loans have fallen to their lowest level since July 2013 – and are down by 18 per cent over the past 12 months alone,” he said.
Year-on-year all finance is down 7.7 per cent. Only first-home buyers have seen an increase, although that was a marginal 0.2 per cent from the year prior.
Experts say there are several reasons for the stark change in conditions from 2017, including the cooling housing market and the Royal Commission into banking.
“This time last year, no one predicted the falls in new lending would be this significant, particularly for owner-occupiers,” said RateCity research director Sally Tindall.
“The housing market was only just coming off the boil and the Hayne Royal Commission hadn’t yet been announced.
“The good news now is the door is wide open for first-home buyers, provided they’ve got a decent deposit saved up,” she said.
Mr Garrett said that alongside the house prices falling in Sydney and Melbourne the lack of increase in rental prices has changed the landscape for investors.
“Rental prices are rising more slowly than at any time in a quarter of a century. This is great news for renters – but won’t put many smiles on the faces of investors,” he said.
Experts have cautioned that further changes, such as those proposed around negative gearing, could have a detrimental effect on the housing market and make lending conditions even tougher.