The chart that helps explain the Sydney property price slump
home prices in Sydney and Melbourne fell the fastest of any Australian capital city last yearFrom the National Australia Bank, it shows the value of new investor home loans issued across the country.
While there are many factors behind the steep decline, the impact of macro-prudential restrictions on investor and interest-only home loans is clearly evident in the chart.In late 2014, APRA, Australia’s banking regulator, introduced a 10 per cent annual cap on housing credit growth to investors. That was followed in early 2017 by a 30 per cent limit on interest-only lending as a proportion of all new loans.
Those supply-side factors, along with a deterioration in sentiment towards the outlook for prices, less foreign investment and uncertainty about possible changes to the tax treatment should the Australian Labor Party win the upcoming federal election has started to impact on demand and helps to not only explain why the value of home loan lending is falling, but also why home prices in Australia’s largest and most expensive cities are coming off the boil.
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