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Friday, 29 May 2015

Investor credit growth above 10 per cent

Fin Aggregates soft

The Reserve Bank released its Financial Aggregates data for the month of April 2015.

Not much joy for business credit, which was flat in the month, or for personal credit, which was negative.

Housing market credit, on the other hand, continues to be as strong as a proverbial ox, up by 7.2 per cent over the past year.

Business credit

Business credit outstanding increased only marginally from $788.3 billion to $788.5 billion in April, which was more than a trifle disappointing!

In annual terms, business credit growth ticked back to 5 percent, an equally underwhelming result.

The latest market statistics from the Australian Securities Exchange (ASX) suggest that there is still a bit happening in terms of transactions.

However, yesterday's capex figures suggest that the outlook for business investment is rather subdued.


On to the housing market, and credit growth expanded strongly both for owner-occupiers and for property investors.

Credit growth to investors was once again the stronger of the two.

In annual terms, credit growth to property investors now sits at 10.4 per cent.

I'm not a huge fan of reading too much in to one month of figures, but smoothing the figures on a rolling annual basis suggests that investor credit growth could be settling in at around the 10 per cent level (rather than accelerating further).

Property investors accounted for 34.54 per cent of outstanding housing credit, the highest level we have seen to date.

I noted at the very inception of this blog that if you want to make money from residential real estate through this new era, the best way to do so would be to anticipate where investors will be pumping up the market and to own properties there.

Inner Sydney was always my chosen region, but there are others - particularly I've noted of late, in certain suburbs of inner Brisbane.


Futures markets are now fully pricing in another interest rate cut by the end of Q1 2016 to 1.75 per cent.