Investor loans & capital city home prices: update

Melissa Jenkins
(Australian Associated Press)

 

The central bank and federal government are considering what they can do to help first home buyers get into the property market as prices continue to soar and investor loans balloon.

Latest figures from analytics firm CoreLogic show the average home price in the nation’s five largest capital cities is 12.2 per cent higher than a year ago.

Prices have climbed in Sydney (18.5 per cent), Melbourne (14.2), Brisbane (3.8) and Adelaide (2.7) in the past year, while Perth recorded a 3.4 per cent drop.

Demand continues to be strong, with the average capital city auction clearance rates last week hitting 80.8 per cent, compared with 64.9 per cent 12 months ago.

Recent Australian Bureau of Statistics data indicates much of the growth in home loan approvals is being powered by investors, rather than owner-occupiers.

The value of home loan approvals rose 1.5 per cent to $39.91 billion in January, driven entirely by the value of investor loans, which jumped 4.2 per cent in the month, as loans for owner-occupied housing fell 0.2 per cent.

The Reserve Bank of Australia has flagged an intervention if growth in investor home loans remains high.

RBA assistant governor for the financial system Michele Bullock says the Australian Prudential Regulation Authority’s directive that banks limit annual growth in investor loans to 10 per cent has addressed some risks, but further action may be needed.

“While the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and some other indicators we use to assess risk may fade over time … (and) we are continuing to monitor their ongoing effects and are prepared to do more if needed,” she said.

The federal minister responsible for formulating the government’s housing affordability package has promised May’s budget will look at ways of unleashing supply.

Federal assistant treasurer Michael Sukkar has also given in-principle support for Victoria’s plan to tax residential property investors who leave assets vacant.

Earlier this week, Treasurer Scott Morrison said he would tackle housing affordability in the budget.

“The problem is being able to save quickly enough to get a deposit which is big enough to actually get yourself into the market,” he told 2GB radio.

“That is a big challenge, particularly for young people, and people are putting off when they buy their house, they’re even putting off when they have kids so they can save more.

“So the ramifications of this run right through the community, in many different ways, and that’s why it’s a very important issue, and that’s why we’ll be addressing it in the budget.”

CAPITAL CITY MEDIAN HOME PRICES

HOUSES

Sydney – $928,000

Melbourne – $692,500

Canberra – $615, 233

Darwin – $510,000

Perth – $506,500

Brisbane – $503, 000

Adelaide – $430,000

Hobart – $379,000

UNITS

Sydney – $745,000

Melbourne – $526,000

Perth – $430,000

Canberra $400,000

Brisbane – $382,000

Darwin – $345,000

Adelaide – $315,000

Hobart – $308,000

Source: Capital city private treaty sales, representing about 85 per cent of all dwelling sales across Australia. Data from CoreLogic Property Market Indicator Summary week ending March 12, 2017.

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