A continuing surge in property investment is threatening future action from the banking regulator, economists have warned.
The total value of investment housing commitments increased 3.2 per cent on a seasonally adjusted basis over June, Australian Bureau of Statistics Housing Finance data shows, according to a Domain article.
This followed a 5.3 per cent increase in investor housing commitments in May.
And if this level of investment growth continued for “another couple of months”, it would likely cause the Australian Regulation Prudential Authority to step in again to curb lending, AMP Capital chief economist Shane Oliver said.
The regulator introduced a 10 per cent annual growth limit on bank loans to property investors in December 2014. Lenders began to react in mid-2015 by introducing policy changes and a sharp fall in investment activity soon followed.
If investment lending growth pushed back towards this 10 per cent level, APRA would “probably issue another directive”, Dr Oliver said.
“There’s a risk APRA might consider lowering the threshold to 5 to 7 per cent … 10 per cent always seemed a little high to me,” he said.