Research

Housing investor loans at two-year low

By Sasha Karen
Lending money, housing investor loans, investment, property investment

New ABS data indicates that housing loans for investors is at its lowest point since 2016 and according to one expert, the decline of investors would mean losing a “crucial” part of Australia’s housing market.

Analysis of ABS data by the Housing Industry Association’s principal economist Tim Reardon shows that investor housing lending is at a two-year low, with the value of investor loans declining from $12.6 billion to $10.7 billion over the year to April.

“The value of housing loans to investors has hit its lowest level since the start of 2016,” Mr Reardon said.

“Investor lending has fallen by 27.4 per cent since reaching a peak in mid-2015, as a consequence of punitive restrictions on investors.”

The cause behind the decline of investor lending was described by Mr Reardon as being a number reasons; mainly tighter financial regulations and targeting specific loan products catered towards investors.

“The federal government targeted investors with two successive interventions in the market through APRA and state governments introduced punitive rates of stamp duty on foreign investors,” Mr Reardon explained.

As a result of the declining number of investors, new home construction has declined, and will keep declining over the next few years, he said.

In order to fix this, and therefore fix affordability challenges, Mr Reardon said Australia needs to support the delivery of new homes, rather than making it more difficult for both owner-occupiers and investors.

“Investor participation in Australia’s housing market is crucial in ensuring that enough rental accommodation is available. Any changes that impact on housing investment must consider the long-term impact on all parts of the market,” he said.

“Ample rental supply in Sydney and Melbourne has been instrumental in allowing their workforce and economies to expand.”

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