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Investors continuing to leave market and be replaced by first home buyers

Investors continuing to leave market and be replaced by first home buyers

by Sasha Karen | February 20, 2018 | 1 minute read

A new report by the Housing Industry Association shows investors are still leaving the market, with their absence being filled by first home buyers.

first home buyers, property market, property investment, investing
February 20, 2018

The National Outlook for 2018 report from the HIA, which analysed the building downturn that started in 2016, shows the impact the departure of investors has on house construction.

“The supply of new housing is now closer to meeting the demand for housing than at any time since 2003. The enormous pent-up demand for housing in east-coast metropolitan areas is finally being met by a record supply of new apartments,” said Tim Reardon, principal economist at the HIA.

“The boom in apartment building has already started to calm but with population growth remaining high, buoyed by strong overseas migration, we expect that demand for housing will remain at elevated levels for the next few years.

“Investor activity in the housing market is continuing to cool as a consequence of punitive taxes and regulatory imposts on investors, but they are being replaced by first home buyers who have entered the market off the back of state government incentives.”

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With the absence of investors in the market, the HIA is predicting that building activity will continue to decline at a modest rate down from record highs, keeping consistent with the current cycle, and will reach its bottom in 2019.

The report also states the various government actions that are pushing out investors include:

  • State governments imposing punitive stamp duty charges on foreign buyers;
  • Federal charges for foreign purchasers;
  • A new set of visa rules that could slow overseas migration;
  • Restricting lending to domestic investors; and
  • New regulations limiting interest only lending.
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