Housing loan approvals took a sharp decline in September as the tighter credit conditions begin to be revealed in the data. Total lending dropped -5% from August and -4.7% from September last year, driven by a 6% drop in owner occupier loans and a 3.4% drop in investor loans. Investor loans are down 12.9% on last year and are at the lowest level since July 2013. The curtailing of credit as a result of banks cracking down on loose lending practices following the interventions by APRA and the Royal Commission is a key factor in the decline. The drop in housing values is also a contributor given current buyers can pay less for a house than 12 months ago. Given that the housing market in Australia is highly leveraged, the availability of credit is a significant indicator of the strength and likely direction of housing values.
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