housing market house

So, we’ll be rooned on the real estate front, yes? That’s the message you’ll get from both of the country’s two largest media groups, Nine and News Corp — who also happen to have a huge stake in real estate sales via their respective property arms. 

News Corp owns 61% of REA, the country’s biggest property website listings business, Nine (after the Fairfax Media takeover) now controls nearly 60% of Domain, the distant number two to REA. They also know that hype about property — whether of the positive or negative variety — gets people clicking on their websites.

News Corp outlets and Nine’s Financial Review have also been campaigning against Labor’s proposed negative gearing and capital gains tax reforms. That’s not just News Corp’s usual bias or the shift to conservatism underway at what used to be Fairfax — the SMH and The Age‘s political coverage increasingly consists of unquestioning reporting of government attacks on Labor.

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It reflects the fear that the withdrawal of taxpayer subsidies to future property investors (remember, the vast bulk of property investment will be untouched due to grandfathering) might slightly curb the property price circus that Sydney and Melbourne have been in recent years and probably will become again.

But as the hysteria about some welcome moderation in two of our most overheated property markets continues, no one bothered to read the monthly credit data from the Reserve Bank issued on Friday.

The December credit report revealed that yes, lending to owner occupiers and investors is slowing — investor lending growth is now at its all time low (since it started being measured back in 1991) at an annual 1.1%. Lending to owner occupiers growth fell to an annual 6.5% from 6.9% in the year to November. That’s the slowest annual rate of growth since November 2016.

Cue talk of property price collapses and credit squeezes. Except… business lending grew at 4.8% in December, the strongest rate of growth since late 2016 and faster than overall home lending (4.7%). That is the first time since February 2009 that the annual rate of growth in business lending exceeded the annual growth in home lending.

That might be partly due to a softer housing market, but we also want our financial institutions pumping more money into businesses, especially small and medium businesses. Both have for so long struggled to attract investment compared to home lending because they can’t offer the security of residential real estate.

It also suggests that much of the talk of a credit squeeze is from the hype merchants and henny pennies of the property sector. It’s not coming from those who should be taking a broader perspective of the economy, in which real estate construction is just one major industry, not the be-all and end-all.

But that’s likely to be forgotten once the royal commission report is released late this afternoon (earlier for media favourites hand-picked by Phil Gaetjens and Josh Frydenberg), when vested interests, including in the media, start pushing back against Kenneth Hayne’s recommendations.

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Peter Fray
Peter Fray
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