Housing credit records slowest growth in five years

By Gerv Tacadena

Housing credit moves at its slowest in five years

The latest figures by the Reserve Bank of Australia revealed the continued weakness of housing credit in the month of May 2018.

Citing the central bank data, CoreLogic said the total housing credit in May expanded by 0.4%, the slowest monthly growth since January 2013. Over the past year, lending growth was at 4.8%, which is considered sluggish compared to the market since February 2014.

Owner occupier credit expanded by just 0.6% on a monthly basis, while on an annual basis it has increased by 7.9%.

On the other hand, investor housing credit was unchanged in May. The last time there was no change in investor credit on a monthly basis was December 2015. Meanwhile, investor lending grew by 2% on an annual basis, the slowest credit growth recorded.

CoreLogic's Cameron Kusher said the flat growth in investor lending has been extremely rare over the past two decades.

"Given that credit has become tighter and there is little sign of loosening, it seems likely that investor credit demand will remain soft and as a result value growth across the housing market will continue to be dampened," he said.

Evaluating these figures, Kusher said the downtrend in home values is likely to persist in the months to come, particularly in the most expensive markets of Sydney and Melbourne.

"The trend of softening demand from the investor segment also seems likely to persist over the coming months as accessing credit is difficult accompanied by low rental yields and limited value growth potential currently in the market," he said.

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