Home Lending Data Continues On A Downtrend Trend

By Glenn Dyer | More Articles by Glenn Dyer

As expected home lending fell sharply in December to be down sharply for 2018 as a whole as loans for apartments and units fell steeply followed loans for owner-occupiers.

Figures from the Australian Bureau of Statistics yesterday show that in seasonally adjusted terms lending dropped 4.4% between November and December to $32 billion, the lowest level in three years.

This is driven by a 6.4% drop in mortgages for owner occupiers and a 4.6% drop in lending for investment properties, continuing the weaker trend we have seen for most of the past year.

In the year to December, lending fell 19.8% with lending for owner-occupied homes down 16.2% and 27.8% for lending to investors. Loans for first home buyers were down 12.6% compared to December 2017.

The ABS said this fall was smaller than the 15.5% fall in loans to owner-occupier non-first home buyers.

The RBA is well aware of this weakness in dwelling investment (and falling approvals, down 22% seasonally adjusted in the 12 months to December, thanks to a 38% drop in approvals of apartments and home units and an 11% plus drop in new private dwellings.

In the first Statement on Monetary Policy last Friday the Reserve Bank identified weak dwelling investment as a key weakness for the economy:

“Very weak conditions in the earlier stages of residential development identified in business liaison point to further downside risk to dwelling investment in 2020 and beyond.” In fact, the RBA sees dwelling investment falling 10% or thereabouts over the next two to three years,” The RBA said.

“The slowdown in lending for investor dwellings this month continues the steady decline over the past two years, with the value of new investor loan commitments down around 40 percent from the peak at the start of 2017,” ABS chief economist Bruce Hockman said in a press release yesterday.

“The slowdown in lending for owner occupier dwellings is more recent, with falls concentrated in the last half of 2018.”

“In seasonally adjusted terms, the value of lending for owner occupier dwellings excluding refinancing fell in New South Wales (-6.1 percent), Victoria (-6.6 per cent), Queensland (-9.9 per cent), Western Australia (-6.3 per cent), the Australian Capital Territory (-4.9 per cent), the Northern Territory (-18.3 per cent) and South Australia (-1.0 per cent). Tasmania (4.2 percent) recorded the only rise this month,” the ABS said.

Lending to businesses dropped 9.7% on a seasonally adjusted basis.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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