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Investors now ‘scared of housing market’

Latest home loan approval data sparks concern.

Azal Khan

Digital Journalist, Your Money

Housing finance figures released by the Australian Bureau of Statistics show home loan approvals slumped 6.1 per cent in December 2018.

The numbers were much worse than the two per cent decline tipped by analysts, showing falling house prices and tight regulation continues to squeeze the troubled housing sector.

Louis Christopher, CEO of market analyst SQM Research, said the “atrocious” figures are driven by a lack of confidence in the housing market.

“I was surprised at the magnitude of declines,” Christopher told TICKY.

Housing finance approvals in New South Wales were down six per cent, Victoria was down over six per cent while Queensland was down a massive nine per cent month on month.

Christopher says investors are spooked.

“We have been seeing a big fall off in investor demand. Initially, that was triggered by investors not being able to get a loan.

“Now they’re scared of the housing market. They do not want to actually get the loan.”

Even for buyers who do want to get a home loan, the banks are not making it easy.

“With applying for a loan, it’s taking on average four weeks for a good borrower to get the money.

“On top of that, they’re being put through the grill on many a thing,”

Banks are partly to blame for the pullback in housing approval numbers, Christopher says.

“We know of a borrower with a speeding fine, acknowledged by the bank. The bank then assumed the expense was going to happen month after month afterwards.

“And so that borrower’s borrowing capacity came down. Ridiculous stuff like that is going on right now.”

Those wanting to buy a home are waiting for the market to hit rock bottom.

“Very few people believe we are at the bottom of the housing market.

“We certainly don’t. We think there will be more falls to come,” Christopher said.

Falling rents in most Australian capital cities and a fall in house prices make it a good time for tenants to strike and nab a good deal.

Sydney vacancy rates alone have risen by 40 per cent since January 2018.

It’s an ideal market for owner-occupiers, Christopher said, and this will continue throughout 2019.

“It’s a tenant’s market and it’s a buyers market. And it’ll become even more of a buyers market and even more of a tenants market overall,” he said.

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