Housing supply challenges ahead
After a surprisingly solid April for business credit, total credit growth slowed to 0.39 per cent in May.
With credit growth dropping from 6.6 per cent to 6.2 per cent over the year to May, it's clear that current policy settings are contractionary.
Credit growth to property investors dropped to just 0.19 per cent, while lending to buy or build new dwellings is already at the lowest level since the global financial crisis 15 years ago.
This doesn't bode well for the supply of rentals or new dwellings.
Overall housing credit growth slowed to 0.39 per cent in May, taking the annual growth down to 5 per cent.
As such the housing credit impulse appeared to lose some momentum in May, but the market is being supported by record growth in rents in Sydney, Melbourne, and Brisbane, and a dearth of properties for sale.
Overall, it's clear that interest rates at currently levels are slowing the growth of credit and the money supply.
