The fact that the value of loans to property investors fell 7.1 per cent in January 2012 shows that Australia property investors are cautious on property investment.
Overall, home loan approvals dipped 1.2 per cent in January 2012, the first fall in 10 months, the latest Australian Bureau of Statistics figures show.
The number of loans from banks to buyers for newly built homes fell 6 per cent, down in dollar terms by 2.1 per cent for the month. Total value of lending to both home buyers and investors fell in January by 2.3 per cent, down to $20.732 billion.
The ABS figures reflect a tentative start to the housing market this year with sale volumes in capital cities down and fewer homes on the market.
According to CommSec economists, the average home loan across Australia stood at $291,300, a reduction of 2.3 per cent from the year before.
The winding back of stamp duty concessions in NSW this year meant fewer first home buyers were entering the market, Westpac senior economist Andrew Hanlan said. As a result, housing finance in NSW slumped 6.3 per cent.
Investors were cautious despite better rental returns as the prospect of sizeable capital gains are just not there.
However, if the Reserve Bank cut interest rates again, investors should react by borrowing more based on historical data.