The Northern Rivers Times
December 7, 2023
38 REAL ESTATE
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The severe credit squeeze now being imposed on property investors throughout Australia has cost over $35 billion in new finance that could have housed more than 125,000 tenants according to Kevin Young, President of Property Club, Australia’s largest independent property investment group. Mr Young said that ridiculously tighter lending rules being imposed on banks by the Australian Prudential Regulation Authority (APRA) combined with higher interest rates has meant that lending to property investors has significantly dropped since early 2022. “Most tenants would never have heard of APRA but this bureaucratic government organisation has helped orchestrate one of the biggest rental crises in Australia’s history. “For the past eight years they have waged a war on Australian property investors that have resulted in thousands fleeing the rental market while many more thousands are now unable to enter the property investment market because of outrageous lending requirements they are imposing on bank lending to property
investors. “The net result property investors are being treated like mortgage lepers and lending to property investors slumped from $11 billion
has promised for social housing over the next four-year period” he said. Henry Croaker, Principal of Australian Mortgage Intelligence
Kevin Young, President of Property Club
per month in early before interest rates started to rise to an average of around $9 billion per month since that peak – a loss of more than $2 billion on average per month in property investment lending since May 2022. “Over this period more than $35 billion in property investment lending has effectively been sucked out of the Australian economy that could have purchased over 50,000 homes that would have provided homes for more than 125,000 tenants. “This $35 billion in lost property investment lending is more than three times the taxpayer funded $10 billion the Federal Government
said that APRA increased the minimum serviceability buffer interest rate to be used by the banks from 2.5 per cent to 3.0 per cent during 2021. “Back then during a time of record low interest rates this increased serviceability buffer interest rate had little impact on the property investment lending market. “However, when interest rates started to rise last year and now with 13 interest rate rises in 18 months, this increased buffer rate has meant that a large number of property investors are not qualifying for investment loans. “As result, our
company has the borrowing capacity of investors falling from a peak of 7 times their annual income to now a low of 4 times their annual income.” he said. Keving Young added that this increased buffer rate was just one of several disastrous decisions APRA had made in regard to property investors since 2015. “In 2015 they basically abolished interest only loans for investors in Australia that saw hundreds of thousands of investors exit the property market since that time because they could not afford principal and interest payments. This single move sent a huge shock wave through the property investment community that comprises mainly mum and dad investors. “To highlight the stupidity of this move in Perth that is experiencing the worst rental crisis in Australia it is no surprise to learn that more than 19,000 exited the WA property market over the past year. “There needs to be a root and branch reform of APRA as soon as possible so we can boost private sector investment in housing. This is the only way we will solve the rental crisis in Australia.” he said.
