Online Seminar: The Effect of Investor Credit Supply on Housing Prices
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About the event
What is the effect of investor credit supply on housing prices? We provide evidence on this question using quasi-experimental variation in credit supply to investors caused by macroprudential policies implemented in Australia. The policy we focus on, placed a bank-level cap on mortgage credit growth to investors. We show that this policy caused a sharp and large drop in credit growth to investors relative to owner-occupiers. We use variation in the investor ownership share across regions and dwelling types to identify the effect of investor credit supply on housing prices, rents and transaction volumes. We find no significant effect on the growth rate of housing prices. There is evidence that the lending restrictions lowered transaction volumes but rents were unaffected. Our findings are consistent with models assuming a largely unconstrained housing rental sector.