Work

The effects of macroprudential policy restricting housing investor credit supply

Year: 2025

Type: article

Abstract: We study the effects on the housing market of two macroprudential policies in Australia restricting credit supply to residential housing investors. The first policy placed a bank-level cap on mortgage credit growth to investors. The second policy placed a bank-level cap on interest-only lending, which is predominantly used by investors. Both policies caused a large and sharp reduction in new investor lending relative to new owner-occupier lending. Using unit-record data on property sales and listings, we show that the restrictions on investor lending reduced the share of properties purchased by investors and reduced the relative price of properties in investor segments of the market. Our results demonstrate the potential efficacy of macroprudential policy restricting credit supply to investors.

Source: Journal of Urban Economics

DOI: 10.1016/j.jue.2025.103785

Authors: Christian Gillitzer, Nalini Prasad

Institutions: The University of Sydney, UNSW Sydney

Language: English

Topic: Housing Market and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $5,080

Funder: University of New South Wales