The effects of macroprudential policy restricting housing investor credit supply

Christian Gillitzer and Nalini Prasad

Journal of Urban Economics, 2025, vol. 149, issue C

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.

Keywords: Macroprudential policy; Credit conditions; House prices; Investor lending (search for similar items in EconPapers)
JEL-codes: E44 E5 G21 G28 R21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:149:y:2025:i:c:s0094119025000506

DOI: 10.1016/j.jue.2025.103785

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