Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Tuesday, 14 February 2017

Investor lending resurgent in Sydney

Trend finance hits record

Commercial lending finance was weaker in the month of December, giving back a fair chunk of the 15 per cent jump from November, 

Nevertheless the trend for monthly lending finance hit it highest ever level at more than $73 billion. 

At the industry level, there are no signs of any rebound in financing for the mining sector, suggesting that the recent boom in coal and iron ore prices is unlikely to lead to any significant increase in resources investment. 

In fact, financing for the mining sector crashed by more than two-thirds over 2016, with the best performing sectors instead including construction and transport. 

Investor loans - a mixed picture

The national rebound in investor loans in 2016 masks a huge divergence in fortunes around the traps.

In Sydney, investors are well and truly back with $6.3 billion of investor loans in December 2016 being some 36 per cent higher than the $4.6 billion seen only a year previously. 

There was also a resurgence in investor lending in Victoria, but most other states and territories are only seeing activity levels that are lower than in the prior year. 

In the resources-focused Northern Territory, meanwhile, the 12-month moving average for the value of investor loans has collapsed by 51 per cent from the peak.

The wrap

Clearly a mixed picture for property investment loans, then, with the Sydney market looking set for a strong first half of 2017. 

The commercial finance picture is patchier, although the Reserve Bank's optimism appears to have been justified by a stonking NAB Business Survey.

NAB reported today that business conditions had blown off spectacularly from a December reading of +9.9 to a 9-year high of +16.2 (New South Wales the clear leader of the states with a reading of +23).

This was the strongest result since the financial crisis and miles above the long-run average reading of +5.

Business confidence also tore higher from +5.7 to +9.8 in January, while the employment index hit its highest level since 2011.

A seriously bullish survey.

Sydney, Opera, House, Australia