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Investor activity picks up speed

Investor activity picks up speed

by Lyall Russell and Emma Ryan | October 18, 2019 | 1 minute read

Increasing home values, low mortgage and attractive rental yields have paved the way for more investment in the housing market.

Australia has recently seen the fastest rate of growth in the value of investment loan commitments in nearly three years. This increase comes after a quiet period, where investor participation fell from 43 per cent in mid-2015 to a recent record low of 25.8 per cent this last July, CoreLogic head of research Tim Lawless said.

“The slump in investment activity was attributable to a range of factors, including macro-prudential policies which limited the speed of investment credit growth and capped interest-only lending,” he said.

“More recently, housing market conditions have turned a corner, with values rising across five of the eight capital cities over the September quarter and three of the broad ‘rest of state’ region.”

The more rewarding prospects for capital gains are attracting investors back to the housing market. It also helps that credit policies have loosened, allowing lenders to be more competitive, Mr Lawless said.

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“Looking forward, there is a strong likelihood that investor activity will increase further. The long-term average shows investors are typically around one-third of mortgage demand, implying investors are currently under-represented in the market. As investment activity rises, we could see increased price pressures as this sector of the market tends to be more competitive in setting new price benchmarks.”

State/territory breakdown

Every state and territory has seen an increase in the value of investment loans, with people committing to getting an investment loan.

Below is how much change in the value of investment lending CoreLogic has recorded in the three months to August 2019.

NSW

6.8 per cent

VIC

19.1 per cent

QLD

19.1 per cent

SA

4.1 per cent

WA

2.7 per cent

TAS

14.1 per cent

NT

5.6 per cent

ACT

12.8 per cent

AUS OVERALL

11.6 per cent

About the author

Emma Ryan

Emma Ryan

Emma Ryan is the deputy head of editorial at Momentum Media.

Emma has worked for Momentum Media since 2015, and has since been responsible for breaking some of the biggest stories in corporate Australia, including across the legal, mortgages, real estate and wealth industries. In addition, Emma has launched several additional sub-brands and events, driven by a passion to deliver quality and timely content to audiences through multiple platforms.

Email Emma on: [email protected]com.au

Investor activity picks up speed
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