Tasmanian home loans continue to fall in January

An ongoing decline in new Tasmanian home loans is a sign of effective banking regulations, according to analysts. 

Tasmanian housing finance, in trend terms, has seen a slow, consistent drop since the Australian Prudential Regulation Authority tightened restrictions on interest-only home loans in May 2017. 

Figures released by the Australian Bureau of Statistics on Tuesday showed the trend had continued into January.

Tasmania’s housing finance decline has been smaller than in other states.

Independent economist Saul Eslake said the slowdown was smaller in Tasmania because there were less property investors than the rest of the country.

He also noted that home ownership was higher in Tasmania than any other state.

“[The figures] suggest measures by APRA over the past couple of years to put a cap on the growth rate of property [prices] and to clamp down on interest-only lending have worked,” he said.

“This is creating more room for home buyers and particularly first home buyers.”

The fall in home loans contradicts the boom in housing and building approvals Tasmania has seen over the past two years. 

National Australia Bank’s chief markets economist Ivan Colhoun said the disparity between the two figures may be due to an increase in apartment buildings being approved. 

He also agreed that the slowdown in home loans was likely due to APRA’s regulatory measures.

“[Property developers] are not borrowing for financing through these [housing finance] measures,” he said. 

“When the units are completed then people borrow to pay for those.”