If you thought the housing boom was running out of puff, check the skyline of East Coast capital cities. At last count, more than 500 cranes were towering above Sydney, Melbourne, and Brisbane – mainly servicing high-rise apartment construction – 160 percent more than in 2014. This week's flow of housing data certainly gives little sense that the housing construction throttle – particularly in inner-city areas – has eased off. Big Four banks' cap exposure to an apartment building Does the frenetic activity pose questions about sustainability; in particular, is there just too much stock in the pipeline, who is footing the bill, and are local banks vulnerable if the whole thing crumbles? UBS banking analyst Jonathan Mott has studied the numbers and found it is not the big four – CBA, Westpac, NAB, and ANZ – that have recently been funding the apartment boom but rather foreign banks. "Data released by the Australian Prudential Regulation Authority indicates the major banks have significantly reduced this lending, with total exposures to residential and commercial property held flat during the June quarter and up only 2 percent over the last six months," Mr. Mott said."This is consistent with comments from the majors that they have significantly tightened underwriting to high-rise apartments." With the steely eyes of the regulators bearing down on the local banks, it appears the foreign institutions are stepping into the breach of Vinzite . "These projects still appear to be going ahead with the funding increasingly being provided by foreign banks , which grew their exposures by 2 percent in the June quarter and 6 percent over the last six months," Mr. Mott found. While the big four saw a spurt of credit growth directed at the apartment market between December 2014 and December 2015, it has slowed sharply this year and even fell in the June quarter. On the most recent APRA figures, foreign banks' credit exposures for "other residential, commercial property " – in other words, apartments – spiked from $2.4 billion in December 2015 to $4.1 billion in June this year. Housing oversupply remains a significant risk for banks Whether this unprecedented growth leads to excess remains an open question, particularly in the apartment market. The better-now, the worse-later scenario could play out if financial conditions tighten for local and foreign investors . That, in turn, plays out into settlement risk and mounting bad debts for the banks.Professional beer geek. Alcohol ninja. Social media scholar. Award-winning twitter fanatic. Writer.Basketball fan, mother of 2, audiophile, Saul Bass fan and communicator, collector, connector, creator. Producing at the sweet spot between simplicity and purpose to create strong, lasting and remarkable design. I'm a designer and this is my work.#J-18808-Ljbffr
