A major bank has argued that the growth in investment lending is not creating risks in the Australian housing market or banking sector.
In its submission to the parliamentary inquiry into home ownership, ANZ
points out that significant growth in investment lending is exclusively a Sydney and Melbourne story. Outside of those two major cities, housing sales and house prices are actually subdued.
“Regulators are currently focussed on not increasing leverage in the system. [ANZ analysis] shows that outside Melbourne and Sydney, investment activity as a share of total lending remains around 40-42%,” the submission states.
“Appropriate consideration should also be given to the wealth creating effects of home ownership and the benefits these bring to the domestic economy.”
In fact, according to the major bank, it is only those who are in a position to afford to who are leveraging themselves and taking on more debt anyway.
“Increased debt is mostly taken on by those who are in the strongest position to service it providing stability for aggregate household debt.
“80% of investor housing debt is held by the top 40% (the top two quintiles) of income earners. The bottom two quintiles account for less than 10% of this debt. This distribution has remained relatively stable.”
The major bank has also dismissed claims that tax treatments, such as negative gearing, are contributing to housing affordability problems, particularly in the Sydney and Melbourne.
“Recent price increases in Sydney and Melbourne have led to suggestions that this is driven by tax treatment of investment. This seems a contentious conclusion given the wide variation in price changes across Australia.
“Increasing prices in Sydney and Melbourne are most likely to stem from the attractiveness of, and development bottlenecks in, those markets. Increased housing supply and appropriate development policies are likely to ameliorate price rises over time.
“[ANZ analysis] shows that investors (and negative gearing) do add to new housing supply and ease pressure on housing stock.”