Property investors back in the market

Property investors are back in the market buoyed by increasing consumer confidence and all the good news they’re hearing about the real estate markets turning the corner last year.

Add to this rising rents and low interest rates and many of the world’s overseas problems sorting themselves out.

One of the leading indicators I watch is investment finance figures as loan pre-approvals are taken out in advance of investors buying their properties.

This week leading financial comparison website RateCity.com.au reported that Australia’s property investment market is showing positive signs of growth, with the highest value of investment loans written since before the GFC, according to Australia’s

In fact, investors borrowed $7.9 billion for property investment loans in February 2013 (RateCity analysis of ABS data, seasonally adjusted). This is the highest value of investment loans written in one month since January 2008. The highest value of investment loans written in one month was in June 2007, with over $9.1 billion, according to RateCity.

Michelle Hutchison, Spokesperson for RateCity, said investment property growth was almost three-times greater than residential home loans.

“It’s interesting to see a significant lift in investment property, especially compared to the growth of residential mortgages. We haven’t seen this level of value in investment home loans for five years.

“While the residential home loan market is a much bigger pool of money compared to investment loans – $13.9 billion compared to $7.9 billion – the growth rate is a lot higher. In fact, the total value of investment loans grew three-times faster than residential loans (15.4% or $1.05 billion compared to 5.3% or $699 million).

“With improved yields and lower rates, it’s no surprise to see the heightened popularity in the investment market.”

RateCity also saw more investors comparing and applying for a home loan through the site. For example, there was a 50 percent increase in the number of investment loan applications in March compared to the same month last year.

“Several factors make it an ideal time to consider property investment such as low interest rates and higher yields. We’re seeing ongoing variable rates starting from 4.99 percent, fixed rates as low as 4.83 percent (for one-year) and intro rates from 4.29 percent.

“Australian Property Monitors’ March quarter report shows most yields for both houses and units were up year-on-year, by as much as 10.2 percent for houses in Darwin and up to 11.4 percent for units in Perth.

“It’s also great to see more Australians are using RateCity to help find a good value investment loan. Shopping for the right investment loan is just as important as finding the best property. Interest rates can vary significantly, as well as features and services may not be available through all lenders.

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About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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