Housing loans to investors have hit a record high, driving up housing prices and shutting new owner occupiers out of the market.
Loans to investors rose 3.7 per cent to $11.9 billion in September, edging above mortgages for owner occupiers and dwarfing the borrowing of first home buyers.
Official figures show the value of loans to investors is up by a quarter compared to the same period a year ago, helping to fuel a price boom in cities such as Sydney and Melbourne.
By comparison, the value of loans to owner occupiers rose 1.8 per cent to $11.8 billion - a 3.4 per cent increase on a year ago.
The figures reveal that for the first time investors are borrowing more than half of all new mortgages approved in a month.
The steady rise of investor activity in Australia's booming property market comes as first home buyers struggle to get a foot on the housing ladder.
The Australian Bureau of Statistics found that loans to first home buyers totalled just $1.97 billion in September.
Economists said the strong demand for home loans among investors is likely to reinforce the Reserve Bank's concerns about an "imbalance" in the housing market.
The RBA and the Australian Prudential Regulation Authority are expected to announce new rules and regulations on lending by the end of the year.
CommSec economist Savanth Sebastian said there may have been a surge in investor loans because some buyers were trying to get into the market before lending standards are tightened.
"In fact for the second consecutive month the value of investor loans has surpassed owner-occupiers (excluding refinancing) a phenomenon that has not occurred previously in records going back over 40 years," he said.
JP Morgan economist Tom Kennedy said there doesn't seem to be any sign that the surge in investment housing will ease.
"That really just adds to the concern that the RBA has voiced that activity is a lot more imbalanced right now than it has been in the past and that could be problematic," he said.
However, Mr Kennedy doesn't believe reforms to lending standards will be too drastic.
Mr Sebastian said APRA and the RBA will need to be careful in using regulations to tighten lending standards without hurting the overall economy.
"You've got such uncertainty around business investment, so you need the housing sector to drive growth," he said.
Meanwhile, lending for the construction of new homes in the September quarter rose to its highest level in 20 years, the Housing Industry Association said.
A rise in the supply of housing will bring down prices and help the economy.
"That is a healthy result in terms of the short term outlook for new home construction," HIA chief economist Harley Dale said.
VALUE OF TOTAL HOUSING LOANS
* Up 2.3 per cent to $28.9b
* Owner occupied housing loans rose 1.8 pct to $11.8b
* Investment housing loans rose 3.7 pct to $11.9b
* Loans for refinancing owner-occupiers rose 0.6 pct $5.2b
(Source: Australian Bureau of Statistics)
