This article is from the Australian Property Journal archive
INVESTOR housing loans rose again in August to be more than 34% higher year-on-year, and are nearing the previous peak of January 2022, while analysts have warned that the Albanese government’s proposed changes to negative gearing could dampen housing supply.
New figures from the Australian Bureau of Statistics (ABS) showed the total value of new housing loans rose 1.0% in August to $30.4 billion – 23% higher than August 2023.
New investor loans rose 1.4% to $11.7 billion over the month, 34.2% higher in annual terms, while owner-occupier loans rose 0.7% in the month to $18.7 billion, 16.8% higher year-on-year.
“There were state-by-state variations in the year leading up to August’s modest housing loan rises. Lending in Queensland grew strongly in the past 12 months and was the key driver behind the August increase,” said Mish Tan, ABS head of finance statistics.
“The total value of lending for housing in Queensland rose by just over 40% in the past 12 months. This $2.0 billion rise was more than any other state.”
The strength of demand for investment properties in the sunshine state saw loans rise 7.9% to $2.74 billion – a level now 18% above Victoria.
With a rise of 2.6%, Queensland was also out in front in driving growth of owner-occupier loans.
Maree Kilroy, senior economist for Oxford Economics Australia, said the deceleration in price growth is broadening.
“Advertised stock is running ahead of demand in several markets and affordability pressures are pushing buyers towards lower prices properties. This is evident in the lower quartile price bracket holding up, quarterly unit price growth finally outpacing houses and the faster pace of growth seen by the mid-tier cities.
“Following a 7.5% lift in the median combined capital city house price in FY2024, we now expect notably softer growth over FY2025, with interest rates likely on hold until June quarter 2025.”
Construction loans for business lifted 7.9% in August to $3.24 billion, to be 61.9% higher year-on-year. Business loans for the purchase of property was 2.3% higher to $6.81 billion, 21.7% higher year-on-year.
Tax changes a risk to supply
Some feared that may be upended by the Albanese government’s toying with the idea of making changes to negative gearing, which attracts both staunch support and fierce opposition. Negative gearing ultimately amounts to billions of dollars in tax benefits each year for property investors, who can deduct losses copped on investment properties.
Prime Minister Anthony Albanese hopped across television networks in recent weeks to quell rampant discussion around the government potentially making changes to negative gearing and the capital gains tax after Nine newspapers reported that the government had asked Treasury for advice on potential changes to policy.
“If the government did indeed reduce and/or phase out existing tax concessions, it would make the purchase of rental properties less attractive,” said Abhijit Surya, Australia and New Zealand economist at Capital Economics.
“In the near-term, that could have a modest dampening effect on house prices. But of greater concern to us, the policy changes could derail the nascent recovery in rental construction, thereby stifling housing supply over the medium term.”
Domain chief of research and economics Nicola Powell said investors currently in the housing market are chasing capital growth, and also being activated by the increased likelihood of the RBA moving on interest rates.
“They’re almost trying to make that purchase before the RBA starts on their rate-cutting cycle, because they will know that once we start to see rate cuts, that will likely spark housing activity and create additional momentum in our housing market,” Powell said.
Albanese told Nine’s Today Show, “Our plans (that) are out there, are about supply. And my concern with the proposals that have been put forward from time to time about negative gearing is that they won’t have a positive impact on supply”.
The Greens and Opposition have teamed up multiple times in the past year to halt or delay the passage of Labor government housing policies through Parliament – mostly recently on the Help to Buy legislation in the Senate, prompting Albanese to threaten a double dissolution election.
The federal government also recently kicked off its National Housing Accord initiative, which aims to deliver 1.2 million homes across the country over five years. However, construction capacity constraints have cast severe doubt over the target being met.
