Fears stretched investors may destabilise housing market Sydney has seen a property surge. Photo: Rob Homer Figures detailing the explosion in investment in Sydney's property market have underlined Reserve Bank concerns that a wave of speculation is making the property market increasingly unbalanced. Investors have lit the fuse under the biggest residential property boom in more than a decade and account more than 55 per cent of all new property loans, according to ANZ Bank economists. Official data from the Reserve Bank also shows bank loans to non-owner occupiers are surging at the fastest pace since the global financial crisis to a record $475 billion. As the Sydney market awaits a flood of auctions in coming weeks, figures from the Reserve Bank on Friday show growth in lending to investors has hit 9.5 per cent a year, a pace not seen since March 2008. That surge has been strongest in Sydney. Sellers are also rushing to cash in on the frenzy. Some 878 auctions are scheduled for Saturday, the start of what is set to be the busiest November on record. Fearing some buyers are taking on too much debt, the RBA has signalled it may intervene to cool the market by placing tougher controls on lending to property investors. But this week the bosses of ANZ Bank and National Australia Bank played down concerns the market may be overheated. ANZ chief executive Mike Smith said he could understand the RBA's concerns about housing investors overstretching themselves, and stressed the likelihood that interest rates would ultimately rise. But he said that, overall, the housing market was in "pretty good shape." "I don't think there's too much froth at the moment," Mr Smith said on Friday. I think the thing that is actually more worrying is the level of household debt, because the level of household debt has now increased to a level which it was pre-crisis, and that's the concern. NAB's chief executive Andrew Thorburn argued growth in the $1.3-trillion mortgage market was sustainable, saying investor lending was in part the result of more new homes being built. He also emphasised that many borrowers continued to pay back debt ahead of schedule. "One of the drivers of demand for investment lending is population growth and people needing homes," Mr Thorburn said. We're extending credit to investors where we believe there is a sustainable repayment of that debt and we're not putting them into a stretched position, and therefore putting our capital and shareholders at risk. Figures published by the RBA on Friday showed the value of all loans extended to housing investors had grown by more than $40 billion in the past year to $475 billion, underlining the rapid growth in investor lending. Sydney house prices rose by 16.6 per cent in the year to September to a record high of $844,000, according to Fairfax-owned Domain Group. The health of the Sydney property market will be tested in coming weeks with a record number of sellers about to take their homes to auction. "It is an unprecedented listings boom," said the senior economist for the Domain Group, Dr Andrew Wilson. A lot of people who have bought are now looking to sell and they all want to get it over and done with before Santa Claus comes. with Stephen Cauchi