The Commonwealth Bank of Australia reports a record half-year cash profit as the housing market sees increased investment activity at the expense of owner-occupiers.
The Commonwealth Bank of Australia (CBA) has announced a record half-year cash profit of $5.45 billion, driven by a surge in investment lending in the booming housing market. Investors are increasingly taking market share from owner-occupiers, with CBA revealing that more than 3,000 housing loans are being settled weekly. Property prices are reaching or nearing all-time highs in various parts of Australia, indicating the strength of this investment wave.
The bank's data indicates a significant shift in lending dynamics, with residential investment lending now representing 43% of new business compared to 37% two years ago. In contrast, the percentage of lending to owner-occupiers has declined, reflecting changing market conditions where seasoned investors, having built equity in their properties, are frequently outbidding first-time home buyers in an increasingly competitive market. This trend raises concerns about the widening wealth divide and intergenerational tensions, as younger buyers struggle to enter the property market.
Following the announcement, shares in CBA surged by over 7%, a reflection of investor confidence in the bank's robust performance amidst a strong housing market. The implications of these trends could signal a long-term shift in the Australian housing landscape, suggesting that without intervention, the reliance on investment capital may further exacerbate the difficulties faced by potential home buyers and may lead to social inequality between generations.
