Queensland bucks the trend as investor finance plunges everywhere else

Latest residential lending data from the ABS reveals that the level of investor finance commitments reported over July has fallen sharply in all states except Queensland.

Sharp declines in lending to investors follow recent action by the regulatory authorities to direct banks to tighten lending conditions to this group. The action by banks was designed to moderate perceived risky lending to investors despite price growth in most capital city housing markets remaining relatively subdued.

Investor loans in Queensland, however, increased by 1.8 per cent over July to $2.14 billion according to the ABS. July’s result was the third highest ever recorded by the ABS for Queensland and followed this year’s peak result of $2.27 billion recorded in March.

Strong investor activity in Queensland has been a key component of the local housing market over the past year. The value of investor finance approved in Queensland over the first seven months of this year remains 24.1 per cent higher than that recorded over the same period last year.

Residential investor lending accounted for 46.2 per cent of all housing finance approved over July in Queensland which was significantly higher than the market share of 41.6 per cent recorded over July last year.

July was also a positive month for owner-occupied finance approvals in Queensland with the value of loans increasing sharply by 7.2 per cent over the month to $2.49 billion. Owner-occupier finance has now increased by 3.1 per cent over the first seven months of this year compared to the same period last year.

Residential investment remains an important driver of economic activity, particularly for the Queensland economy, which continues to generally confront a downturn in the resource sector putting pressure on the local jobs market.

A solid supply line of rental properties is also important for Queensland tenants to ensure sustainable rental outcomes and maintain housing affordability.

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson