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Property investors are coming back

key takeaways

Key takeaways

The value of total new investor loan commitments rose 1.9% in November and was 18.0% higher compared to a year ago.

The value of new owner-occupier loan commitments for dwellings rose 10.1% through the year to November 2023, while the number of these commitments rose 7.3%.

Loan approval are a great forward indicator of what's ahead for our housing markets, and it seems both home buyers and investors and ready to take advantage of the real estate markets in 2024.

This creates a window of opportunity for savvy investors to get in to the market before "the crowd" realises interest rates have peaked, and will eventually fall

Property investors are getting ready to take advantage of our housing markets in 2024.
The value of total new investor loan commitments rose 1.9 per cent in November and was 18.0 per cent higher compared to a year ago.
The value of new owner-occupier loan commitments for dwellings rose 10.1 per cent through the year to November 2023, while the number of these commitments rose 7.3 per cent, according to the latest Australian Bureau of Statistics (ABS) data.
Loan approval are a great forward indicator of what's ahead for our housing markets and this creates a window of opportunity for savvy investors to get in to the market before "the crowd" realises interest rates have peaked and will eventually fall.
Total Loan Approvals

There has been a sharp rise in loan approvals over the last months of 2023.

Growth In Loan Approvals
And not surprisingly most borrowers are opting for a variable interest rate loan, rather than a fixed rate loan.
I guess they believe rates will fall at sometime in the near future.
Loans Fixed Vs Variable
The growth in owner-occupier and investor lending seen through 2023 was driven by the three states with the largest populations.
Home Loans By State
For both owner-occupiers and investors, New South Wales saw the most growth.
Loans Investors By State

Average new loan sizes hit new record highs in three states

The average new loan size again hit new record highs in Queensland, South Australia and Western Australia, however average new loan sizes dropped this month in NSW, Victoria, Tasmania, the Northern Territory and the ACT.

Average new loan size Monthly change Year-on-year change
National $608,448 -0.3% 1.1%
NSW $754,832 -1.0% 0.3%
VIC $602,471 -1.0% -2.6%
QLD $557,510 - record high 1.7% 4.7%
SA $510,057 - record high 0.6% 6.4%
WA $497,275 - record high 0.2% 3.9%
Tas $444,726 -2.7% -3.1%
NT $429,333 -1.3% -2.5%
ACT $598,643 -0.6% -6.0%

Source: ABS Lending Indicators November 2023, released 12 January 2024, seasonally adjusted data.

RateCity.com.au research director, Sally Tindall, said:

“Refinancing largely stabilised in November after three months of steep declines.”

While we’re now well past the peak in refinancing, the value of mortgages switching each month is still at elevated levels,” she said.

Rock bottom rates in 2021 might have shone a spotlight on refinancing, but the rising cash rate has been the blowtorch that’s spurred many borrowers into action.

The latest ABS data shows over 700,000 mortgages have refinanced since the start of the rate hikes, switching more than $360 billion worth of loans.

Refinancing could well drop further in the first half of 2024, however, if we do see cash rate cuts later in the year it could be game on for some borrowers ready for their next move.

It’s fantastic to see first home buyer numbers rising again in the month of November, despite rising rates and property prices.These numbers are likely to lift further in 2024, particularly when the government’s much touted Help to Buy scheme finally gets up and running.

While this scheme will help lower-income first home buyers on to the property ladder without having to shackle themselves to super-sized debts, the places in this scheme are set to be capped at just 10,000 per year, which is unlikely to be enough to cater for the potential demand,” she said.

About Robert Chandra is a Property Strategist at Metropole and has an intrinsic understanding of property markets backed by many years of real estate experience. This coupled with several degrees gives him a holistic perspective with which he can diagnose clients’ circumstances and goals and formulate strategies to bridge the gap.
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