Advertisement
What really powers the cloud? Behind every Google search, A...
A lot of what defines a home isn’t visible at handover. I...
Private equity has played a significant role in shaping Indi...
Luxury real estate is one of the most talked-about segments ...
Airports play a much bigger role than just enabling travel -...
National Australia Bank (NAB) has reported a 15% quarter-on-quarter decline in domestic home loan applications, indicating softer demand in Australia's housing market. The slowdown comes after tax reforms aimed at increasing housing supply and follows similar trends highlighted by other major lenders. While the bank's home and business lending books continued to expand, it also reported an increase in loans under close monitoring due to challenging business conditions. NAB said sectors such as construction, transport and storage were facing the greatest pressure, partly due to supply chain disruptions and higher freight costs linked to the conflict in the Middle East.
National Australia Bank (NAB) has reported a 15% decline in domestic home loan applications during the June quarter, reflecting weaker demand in Australia's housing market as recent tax reforms and softer property market conditions continue to affect borrowing activity.
The decline comes after the Australian government introduced capital gains tax and negative gearing reforms aimed at encouraging new housing supply. Market analysts believe these measures are likely to further moderate housing demand, with home prices easing across most major Australian cities and auction clearance rates falling to their lowest levels since the COVID-19 pandemic.
The trend is not limited to NAB. In the past few weeks, Australia's second-largest lender, Westpac, also reported a 10% decline in mortgage applications following the implementation of the housing-related reforms, indicating that demand has weakened across the banking sector.
Despite the slowdown in new loan applications, NAB's Business and Private Banking (B&PB) division recorded a 2% quarterly increase in home lending balances, while business lending balances grew 4%, showing that its existing loan portfolio continued to expand.
The bank also highlighted early signs of stress in parts of its lending portfolio. Loans placed on its internal watch list in the B&PB division increased by 8% compared to the previous quarter. NAB said this reflected both current and potential impacts of a challenging operating environment for businesses.
According to the bank, pressure on asset quality remained most visible in the construction, transport and storage sectors. It linked these challenges to the ongoing conflict in the Middle East, which has disrupted trade flows, increased freight costs and affected global supply chains.
David Tuckwell, Chief Investment Officer at ETF Shares, said the increase in watch-listed loans should not be overlooked because it suggested NAB's bankers were identifying a growing number of customers facing financial pressure or those at risk of coming under stress.
At the same time, NAB reported an improvement in the quality of its impaired loan book. The ratio of non-performing loans to gross loans and acceptances in the Business and Private Banking division declined to 2.91% at the end of the June quarter from 3.00% at the end of the previous quarter.
Tuckwell noted that the improvement in impaired loans during the same period indicated the bank was resolving older problem loans while proactively moving potentially vulnerable borrowers onto its watch list before their financial position deteriorated further.
Following the update, NAB shares gave up part of their early gains and were trading 0.4% higher during the session, while Australia's benchmark ASX 200 index was down 0.6%.
Australia's housing market has been under pressure in recent quarters due to affordability challenges, elevated borrowing costs and policy changes affecting property investment. Although the Reserve Bank of Australia has adjusted its monetary policy over time, analysts continue to expect borrowing demand to remain subdued until there is greater certainty around interest rates, housing affordability and economic conditions.
Source Reuters
Advertisement
Facebook
Whatsapp
