Investor crackdown won't ease house prices, says NAB

The crackdown on loans to property investors will not slow rising house prices in Sydney, according to NAB



The crackdown on investor lending will not slow booming house prices in Sydney, says NAB.

In December, banking regulator APRA announced a 10% a year cap on investor credit growth in a bid to cool the heated housing market. Since then, many major and non-major lenders – including NAB – announced changes to investor lending policies, including increased interest rates and decreased LVR limits on investor loans. 

However, NAB's head of retail banking, Gavin Slater said slower growth in investor lending would not significantly affect the property boom in Sydney and Melbourne, according to a Fairfax report. In fact, he says prices will continue to head north.

“I don't think where we're heading, around looking to moderate growth to under 10%, at an industry level, will have a significant impact on asset prices themselves, but that's not the intent of the action,” Slater said in Sydney last week.

But despite the regulator's close eye on investor lending, APRA statistics show that loans to investors increased by 3% in the quarter to March, since it announced its crackdown in December. Over the year to March, loans to investors climbed 12%.

Slater says investor demand will continue to be driven by population growth, urbanisation and foreign investors.

This echoes what Mortgage Choice chief executive, John Flavell said earlier this month.

“In Australia we have a modest rate of population growth driving modest increases in property demand. We have had historically low levels of new construction keeping supply tight, especially in Sydney and Melbourne,” Flavell said.

“We continue to see high rates of urbanization, particularly in NSW and Victoria, as our population is attracted and retained by our largest cities given the employment opportunities and the amenities they provide.”

Keep up with the latest news and events

Join our mailing list, it’s free!