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.
“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.”
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.
6.8 per cent
19.1 per cent
19.1 per cent
4.1 per cent
2.7 per cent
14.1 per cent
5.6 per cent
12.8 per cent
11.6 per cent