Housing loan approvals showed a further declines in December 2018 with significant falls for both owner occupier and investment loans. Total lending for the month dropped -5.9% from November 2018 and is down a staggering -19.8% lower than December 2017 taking total lending to a new 5 year low. The rate of decline has been so significant that total lending over the full 12 months to December was down 10% on the prior correspondence period. The latest decline was driven by a fall in owner occupier loans -6.4% and a fall in investor loans, -4.6%, now at a 6 year low. The prudential controls, the impacts from the Hayne Royal Commission, the higher stamp duties on foreign purchases and the prospects of changes to residential investment taxes have taken the wind out of the sails of the residential investment market. Whilst it is time that many of the government and prudential controls were relaxed (and some have), the Federal and NSW elections this year are unlikely to see any meaningful housing policies take hold until 2020. As a result, annualised credit growth (which is now at -10%) is unlikely to return to positive territory until at least 2021.
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