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Friday, 15 May 2015

Lending finance (more Sydney records)

Lending improves moderately

The ABS released its Lending Finance data for March 2015 today.

Total lending increased a little in the month by 1.6 per cent to $72 billion, but in truth there has been no real improvement for around a year now in total lending.

On a rolling annual basis total lending has continued to increase, but only just.

Housing finance for owner-occupation increased by 0.8 per cent, while commercial finance was up by 1.6 per cent.

The only snag here is that "commercial finance" actually includes property investment in this ABS data series, with some 29 per cent of this balance relating to residential real estate.

43 per cent of total lending was for real estate when property investment loans are included.

The data suggests that we have a long way to go yet before there is any genuine signal of a business recovery.

This echoes what we have seen lately in the Reserve Bank's Financial Aggregates data.

Investor loans

Meanwhile, property investment continues to be focussed on a handful of capital city locations.

In the month of March a record $5.9 billion of lending finance was written to property investors in New South Wales.

Thus is the highest monthly figure ever recorded in any state at any stage in Australia's history.

On a rolling annual basis total lending in New South Wales is actually accelerating, rising from a then record $57.4 billion in January 2015, to $58.0 billion in February, and now to another record of $59.4 billion in March.

The latest monthly figure suggests there is some way for this trend to run yet.

The ABS data is not seasonally adjusted, but the raw original data charted below shows how $5.9 billion in investor lending looks as compared to what was considered "the norm" as recently as just three years ago in March 2012 at a meagre $2.3 billion.

Monthly investor lending in Queensland zipped up to its highest level since November 2007 at $1.7 billion. 

There is clearly evidence of some strong property market activity happening in some inner suburbs such as New Farm and East Brisbane, for example.

And even struggling South Australia is showing signs of life, recording its strongest ever month for property investment at $492 million.

Investor lending remains subdued in Western Australia, and is likely to remain so for the foreseeable future as the mining investment boom unwinds.

The wrap

Precious few signs here of a pick-up in business lending, unfortunately.

On the other hand property investor lending now appears to be spreading across four of the five most populous states.

In the meantime, we continue to be peppered by articles lecturing us how interest rates are not impacting investor behaviour.

Whatevs. Look at the charts.