“The value of investment housing commitments decreased by 1.9 per cent in May, in trend terms," continues Gunning. "The dollar amount approved for the purchase of dwellings by individuals for rent or resale is at the lowest level since February 2016.
“In trend terms, the number of established dwellings purchase commitments decreased by 0.6 per cent while the purchase of new dwellings decreased by 0.9 per cent and new dwelling construction fell by 1.5 per cent."
The proportion of first home buyers, as part of the total owner-occupied housing finance commitments, remained unchanged at 17.6 per cent.
“The continued decline in housing finance confirms the feedback from the market that the APRA restrictions and the fallout from the Royal Commission into Banking have resulted in an extremely cautious approach by lenders,” says Gunning.
“Loan applications are now being scrutinised for real costs of living, including outgoings such as school fees and use of credit cards. At the same time, an ultra conservative approach is being taken by banks with their valuations which means funds available are below purchaser’s expectations.
“We need to ensure that lending approaches reflect the market rather than set the market, which appears to be case at the moment.”