Value of new housing loans dive in September quarter

The Australian 11:00pm December 12, 2018

Samantha Bailey

The value of new housing loans in Australia plunged 7.4 per cent to $89.2 billion for the September quarter, according to data released by the prudential regulator.

The quarterly ADI report, which details commercial property exposures, residential property exposures and new housing loan approvals, found that impaired assets and past due items lifted 5.4 per cent to $27.6bn for the period.

The total value of domestic housing loans on the books of authorised deposit-taking institutions rose 5.4 per cent on the previous year to $1.6 trillion, APRA said.

It comes amid predictions the domestic housing market will continue its downturn next year, and it could worsen if economic growth slows and Australia’s unemployment rate rises.

Chris Bedingfield, joint managing director of Quay Global Investors, said on Monday the property market downturn could last longer than people think, if the RBA is late to act and the major banks don’t start easing tight credit access.

Mr Bedingfield warned that Australia was building too much residential property.

“We’ve gone from being a 140,000 to 150,000 dwelling per annum economy to running at 230,000 dwellings. The excess comes at a time when banks are tightening access to credit.

“The access to money has changed, and it’s equivalent to several rate hikes in our view,” Mr Bedingfield said.

“At the same time we’ve got a federal government trying to create a surplus at totally the wrong time.

“We have been worried for some time.”

Mr Bedingfield said he expected the next interest rate move in Australia to be down, but added the Reserve Bank was likely to be late to act because of what happened in 2016, when houses reinflated after a rate cut.

“I think they would be concerned they could reinflate if they moved again,” he said.

“Despite the fact that we’re seeing an early downturn in the housing market, which could potentially spill into the real economy, our concern is that the central bank will be late to the party this time and we’ve got the federal government doing nothing about it.

“The federal government needs to be proactive in its deficit spending.

“I think someone has to go back to the banks and say ‘well you went too far with credit one way, now you’re gone too far the other way’. Somehow they need to find a happy medium, because we live in a credit economy.”

Mr Bedingfield’s comments on the Australian housing market coincided with the release of the latest commercial lending data from the Bureau of Statistics and amid heightened global volatility.

Commercial loans, including mortgages to investors, fell 3.1 per cent to $43.93bn in October, having surged by 8 per cent the previous month. The value of home loans to owner occupiers, however, rose 3.5 per cent for October to $20.15bn, lifting after a September lull, seasonally adjusted figures from the Bureau of Statistics showed.