Table of contents
Investors at near-record highs? – Think again - featured image
By
A A A

Investors at near-record highs? – Think again

The recent record surge in home lending has clearly peaked, with loan activity over October falling for the fifth consecutive month.

HomeloanAlthough owner-occupiers and first home buyers have reported consistent declines in activity since May, investor lending has continued to rise.

The original value of investor loans increased by just 0.4% over October to $9.87bn – but was nonetheless the third highest value of lending to this group on record, below only the $9.91bn and $10.43bn recorded in May and June 2015 respectively, over 6 years ago.

Since June 2015 however, the monthly value of owner-occupied and first home buyer lending has surged, rising by 60.0% and 102.5% respectively.

Despite the current near-record loan value, investor activity clearly remains subdued.

The investor market share of total residential lending has fallen from 42.5% in June 2015 to the current 29.1% and despite recent growth remains below the long-term investor average of 32.8%.

Fig01

ApraHigh levels of investor activity in 2015 encouraged APRA - the financial regulator for the big banks – to initiate actions designed to reduce investor lending predicated on then-booming home prices and fears of imminently rising interest rates.

Currently, however investor activity remains relatively low, housing markets are clearly cooling as prices growth wanes – particularly in the primary investor markets of Sydney and Melbourne – and importantly the RBA continues to stipulate that interest rates will not rise until at least 2024 – nearly three years hence.

Although reviving, investor activity clearly remains in the doldrums and with the national shortage of rental properties reflecting the restrictive policies of recent years pushing rents through the roof.

 

About Dr Andrew Wilson, Chief Economist of www.MyHousingMarket.com.au is widely regarded as Australia’s leading property economist.
No comments

Guides

Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts