Improved credit conditions for Owner Occupiers continues to see gains in funding approvals in September, with overall funding now up just 0.9% year on year to $18.9bn.
Total lending for the month of September was up 1.3% on the previous month with owner occupier loans up an impressive 3.2% but investor loans down -4.0%.
Investor loans are down -13.6% on last year and are -48% lower than the peak in April 2015.
Contributing to the fall in lending for investors are the challenges for funding into the apartment market. Confidence levels around entering into pre-sale arrangements have been slow for some time following the headlines surrounding the building defects in the Opal and Mascot Towers in Sydney and the real issues in settling contracts entered into on prices established 12 months ago.
We therefore expect lending into the investment market to be stable for the next 12 months, whilst these issues dissipate. Owner Occupier loans are now up 5.6% on last year but remain down about -7% from the peak in August 2017.
Subject to their being no external shocks, we expect a similar rise in lending over the next 4 months as borrowers return to the real estate market. Tightening supply conditions over the next 6-12 months will then likely lead to above average pricing increases in 2020/2021.