KordaMentha Real Estate's Property exposures update provides a snapshot of APRA's latest property exposure data on the commercial and residential sectors.

The Australian Prudential Regulation Authority ('APRA') recently released its latest quarterly property exposure data for domestic and foreign Authorised Deposit-taking Institutions ('ADI's').

The Property exposures update - June quarter 2018 provides a snapshot of APRA's quarterly property exposures data on commercial and residential sectors.

Key insights

The number and value of new interest-only loans remain substantially below long-run averages, whilst the rapid expansion of foreign branch banks continues.

Interest only loans

New interest-only home loan approvals remain near the lowest level since reporting commenced in March 2008, despite a slight increase over the June quarter to 15,704 (13,626, March 2018). The value of approved new interest-only loans in June 2018 was 47.8% lower than in June 2017. There has been an equally dramatic decline in interest-only loans as a proportion of total loans, being 16.6% of all new home loans issued for the June 2018 quarter

Foreign bank branches

Commercial property exposures for foreign branch banks are now 364% higher than the post-GFC low of December 2012. Foreign branch banks now represent 14.2% of total exposures at June 2018, up from only 3.4% in December 2012.

Development loans

An 8.8% decline in exposures to development and subdivisions for the 12 months to June 2018 indicates lenders' general aversion to the land development/subdivisions market. Exposures are down 15.3% from the most recent peak in March 2017

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