National Housing Market sees Slowing in line with Tightened Lending

The housing market has slowed virtually in line with heightened levels of regulations across the finance sector and subsequently tighter lending practices and sharp reduction in investment.

With release of the royal banking commission interim report, there’s chance that already tight lending conditions can tighten even further.

Latest crediting aggregates from the Reserve Bank show housing credit tracking the lowest in almost five years.

If credit conditions tighten further we can expect the housing market activity to follow suit.

CoreLogic estimates that National settle sales are already down 10% year on year.

While credit availability is the key factor in the national slowdown, other factors are also dampening housing conditions.

While investors still comprise 41% of the value for new mortgage demand, they continue to face higher mortgage rates, strict servicing criteria, low rental yields and weak capital gain prospects.

Changes to the taxation policy in relation to housing, if we do see a change in government at the next federal election, could also weigh on investor sentiment.