Property investors push first home buyers out of the market

Property investors are flocking to cheap money and making it difficult for first home buyers to enter the market, new research from financial comparison website RateCity shows.

Investor housing finance commitments accounted for 45 percent of all new home loan dollars settled in July (excluding refinancers), ahead of upgraders (44 percent) and first home buyers (11 percent), according to a RateCity analysis of Australian Bureau of Statistics housing finance data.

Alex Parsons, CEO of, said investors had been shouldering their way into the market at the expense of first home buyers in recent years.

[sam id=37 codes=’true’]“Investors have been ramping up their presence in the market for some time, and now account for the biggest proportion of all new home loan dollars settled, making it harder for first home buyers to get a foot on the property ladder,” he said.

“First home buyers now account for just 11 percent of home loan commitments. This is below the 20 year average of 15 percent and has not been this low since 2004.

“At one point in 2009, when government incentives for first home buyers were high, first home buyers and investors were shoulder to shoulder, each accounting for about a third of the home loan dollars financed.”

Regulatory changes introduced three years ago, which allowed property investment through SMSFs, was “adding fuel to the fire”, he added.

That, combined with historic-low interest rates and low or no house price growth over the past three years in most capital cities has seen investors surge into the property market. In August, applications for investor finance via RateCity jumped by 20 percent month-on-month.

“Investors have waited for this moment to re-enter the property market – this is a good thing, provided they’ve done their homework,” Parsons said.

“That means shopping around on rate and fees, but also planning ahead for when interest rates eventually rise – it’s worthwhile doing your sums based on rates being at least 2 percentage points higher than they are now.

“For first home buyers who want to be able to compete with investors, it’s vital that they have their deposit ready to go, have already done their research and be ready to pounce when they do find a property they love.

“Borrowers could also look for some insurance by either fixing part or all of their debts – with two-year fixed rates available from under 4.5 percent, and three-year fixed rates starting at 4.69 percent.”

value of new home loans per month


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