The continuous imposition of restrictions on property investors by the nation's regulator continue to turn investors away and “have run beyond their usefulness”, an industry body has claimed.
Responding to ABS housing data from July 2018, the Housing Industry Association’s (HIA) economist, Diwa Hopkins, said there has been a growing list of disincentives deterring investors from investing in Australia.
According to the ABS figures, the value of investor lending declined by 1.3 per cent and is 15.7 per cent lower than a year ago.
“The concern now is APRA’s interventions appear to have run beyond their usefulness,” said Ms Hopkins.
House construction heavily relies on investor activity, and the decline of investors means the decline of new house construction, she explained.
“By the same token, their retreat from the market will weigh on activity over the near to medium term,” Ms Hopkins said.
“The exiting of investors from the housing market can be traced back to well-documented APRA interventions at the end of 2014 and then again in early 2017.
“In addition, state and federal governments have acted to deter foreign investors by levying additional taxes and charges on their investments in the domestic market.”
Lenders have further tightened their pockets past APRA’s initial restrictions due to the banking royal commission with three out of four major banks raising variable mortgage rates, Ms Hopkins added.
“Add to this, a situation of falling dwelling prices in the key Sydney and Melbourne markets as well as the prospect of increased taxes on investment housing through negative gearing restrictions and increased capital gains tax, and the list of deterrents to investors in the housing market is comprehensive,” she said.
“Overall, most of these factors are having the effect of limiting credit availability.”