Growth in housing finance continues fall to record lows

Growth in housing lending continues to deteriorate, once again hitting record lows.

Despite low interest rates, housing credit rose by only 4.5 per cent in the 12 months to December 2012, down from 4.6 per cent in the 12 months to November 2012 and the lowest growth in the 35 year history of the data.

On a monthly basis, housing credit increased by 0.3 per cent in December, down from 0.4 per cent the month earlier. Growth for owner-occupier credit fell to a positive 0.3 per cent, down from 0.4 per cent recorded in the previous month.

Investor loans currently have the strongest growth at 0.4 per cent, down from 0.5 per cent in November. For the year to December, housing loans to investors grew by 5.5 percent.

» Financial Aggregates December 2012 – The Reserve Bank of Australia, 31st December 2012.


  1. Some FACTS:

    Just based on a few of the current properties for sale in Sydney, this is what is REALLY happening:

    4br house in Frenchs Forest: bought for $1,338,000 in 2007. Currently asking $1,300,000.
    5br house in Collaroy: bought for $2,600,000 in 2010. Currently seeking $1,800,000.
    5br house in Newport: bought for$1,100,000 in 2009. Currently seeking $1,100,000.
    4br house in Newport: bought for $1,675,000 in 2004. Currently asking $1,800,000 (IF they get their price, that’s an increase of 7% over 9 years! So much for Sydney property doubling every 10 years!).
    4br house in Bayview: bought for $2,300,000 in 2007. Currently renting for $1350 pw.

    The government, media and real estate agents are LYING to us – trying to have us believe the property market is rising or recovering.
    If you pay any more than the seller paid 7 years ago for a property, you’re out of touch with reality – which is what the money mongers want you to be.
    Be aware and be careful.

    The biggest problem with the property market in Australia is it’s not transparent.

    The only people who know what’s really going on (who have access to previous sales data) are the agents, governments, developers and media – but they won’t tell you. This is criminal. We should all have access to property data and to the purchase history of the biggest purchase most of us will ever make!

  2. That graph paints a pretty horrible picture! I wonder how long it will be before we start to see the banks profit margins go down like that too…

    Hey Craig as a side note, what is your take regarding a lot of the arguments that are being put forth now about how “2013 is the year for property to come back” etc? Obviously some of it is just spruiking but they do make a good point that through 2012 house sales and prices were low.. but stable(ish) and so it stands to reason this year might be where they start to slowly climb back up again.

  3. @Mortgage Mutilator – I suspect there may be a short lived “recovery” driven by low interest rates and on the back of low sales volumes and high volatility. January is always a slow month for turnover.

    Unemployment is likely to be the key theme this year. Low interest rates might give some short term support to the market (although it’s hard to see any effect), but even a ZIRP won’t help if you don’t have a job.
    Results today on manufacturing continue to look very sick (Aussie $/Dutch Disease) and consumers have their hands in their pockets – they can no longer afford to spend beyond their means.
    And we still don’t have a savior to take up the slack from the Mining Investment Boom…

  4. McGrath is a serial offender. His worst offence was on Channel 9’s 2nd Chance in 2008 when he told everyone, if you look back over the last 100 years property prices have doubled about every 7 to 8 years

    Data from Stapledon shows in 1908 Sydney house prices were $900 in $. This means Sydney house prices should now be $7,372,800. Sadly the actual data from Stapledon doesn’t support McGrath’s claim broadcasted on National TV and considered by viewers to be true, honest and factual.

    It’s sad there is no consumer protection laws in Australia to prevent this happening. I do really feel for the naive first home buyer today. What hope is there when the McGrath marketing machine has coined a term FOMO (fear of missing out) “10. As all the above happens in our connected community we’ll see a surge of confidence and FOMO (fear of missing out), which will stimulate continued investment over the next three- to five-year cycle.” to play with their minds.

    Why is it that their parents didn’t miss out, or than their grand parents didn’t miss out, or their great grand parents? Could it be something to do with the first point, that houses do not really double every 7 to 10 years?

  5. @Peter

    i do understand why he makes such statements.

    basically, he is a sales man, all his profit based on product selling commissions, in this case, the product is the house. to sell his products, he has to talk them up. most of time, by bullshxting.

    however, what i dont understand is that why people keep listening to sales men. especially when they do the biggest purchases of their lives.

    i really love this comment on the youtube video “the only thing that doubles every 7 years are real estate agents ability to bu ll sht”

  6. Computer crashed! As I was saying… the worst kind of pond scum in Australia. Only Foxtons in the UK can hold a candle to these criminals.

    I sincerely wish McGrath would disappear up its own backside so that decent family-run real estate agents (they are out there folks) could get a share of the market.

    Better still – as I’ve said on this site before – get rid of real estate agents all together! We don’t need them any more. There is a thing called the internet – Ebay anyone? Craig’s List? Gumtree? It can’t be any more risky than dealing with unqualified, greedy, lying salesmen can it? We’re not idiots. You see a house, you make an offer to the vendor.

    As Larry David said, you know you’ve got a good deal when both parties are disappointed. At the end of the day something is worth what someone is prepared to pay and what someone is prepared to sell for. You don’t need commission-taking fraudsters quoting ‘market value’ It is a complete misnomer and until we tell real estate agents where they can get off, and in so doing, put the bastards out of business, the crash will not come.

    Get rid of REAs, especially McGrath, and watch prices come down – simple!

  7. Total price = 2.8 X GDP

    Annual new construction is ~1.5%

    Price of annual new construction is 1.5% X 2.8 X GDP = 4.2% GDP

    Housing loans are 85% GDP

    Leanding growth is 0.3% p/m = 3.65%

    Leanding growth % GDP is 85% X 3.65% = 3.1% GDP

    If you build 4.2% p.a. of GDP of new dwelling product and only create 3.1% p.a of GDP in new loans the total market price of the total product cannot rise…

    Insufficient credit growth for price rises IMHO

  8. Is there actually any benefit from keeping the Aussie dollar low by slashing interest rates??
    All it really does is keep the cost of everything high (including house prices)..
    Am I wrong in saying that setting interest rates at 6-7% would make things like cars, petrol and other consumables cheaper?? Thus encouraging spending on things other than overpriced houses??
    I personally would love interest rates to be right up high, at least 10%, not only would I get a nice return on my cash, but possibly bring house prices to 3-4 x average income allowing me to buy outright… Sadly this won’t happen

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