The release tomorrow of Housing Finance data for July by the Australian Bureau of Statistics (ABS) will be an important economic indicator for the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) in considering the need for further action on residential mortgage lending practices.
The Property Investment Professionals of Australia’s (PIPA’s) chair Ben Kingsley predicted a third consecutive rise in investment property lending[1] for July, given historically low interest rates and strong levels of market activity.
“All indications are that housing market activity during this period has been strong, especially in the unit space as completions start to gain in number. The Reserve Bank and APRA will naturally be watching this closely given the evidence of further price increases in most location across Australia.
“Housing finance data is a good indicator of where the market is headed, but it’s important that APRA and the RBA look closely at the data and really understand where the heat is coming from.
“For example, if the number of borrowing commitments from investors for established dwellings has increased significantly, more may be needed to calm investor activity. On the other hand, if finance for new builds has increased, market intervention may not be necessary, because of the lag time in which the data flows through. In other words, if construction approvals are slowing then lending data will soften over time. It’s a fine line our regulators are treating between slowing demand versus jobs and economic growth, short to medium term.â€
[1] Seasonally adjusted estimates
8 September 2016
Adviser Voice:
https://www.adviservoice.com.au/2016/09/eyes-abs-housing-finance-data-pipa-chair-ben-kingsley-urges-regulators-move-cautiously/